Report: VC investments in crypto and blockchain startups have totaled $850M so far this year; Coinbase estimated to have revenue of ~$520M in 2018
LONDON (Reuters) - Major finance and tech firms are pouring money into startups building technology to develop the crypto market …
Context & Ripple Effects
After a frothy 2018 — when blockchain startups pulled in nearly $3.9B from VCs across the first three quarters and ICOs had earlier dwarfed equity rounds with ~$4.5B raised since January 2017 — the pace has cooled sharply: Reuters counts just ~$850M in crypto/blockchain VC so far in 2019. The same reporting puts Coinbase at an estimated ~$520M of 2018 revenue, with the follow-up disclosure that Coinbase UK alone booked $173M, about a third of the total.
The story matters because it marks the pivot point between two eras: the token-sale boom that let founders bypass VCs entirely, and a slower 2019 where traditional finance and tech firms became the marginal buyers of crypto infrastructure — with Coinbase emerging as one of the few startups with exchange-scale revenue to show for the cycle.
First-order effects
- Startups building crypto-market infrastructure now compete for a much thinner VC pool than the 2018 run-rate implied, pushing them toward strategic money from major finance and tech firms rather than dedicated crypto funds.
- Coinbase's ~$520M estimated 2018 revenue — heavily concentrated in its UK entity — makes it the reference point for what a working crypto business actually earns, resetting valuation expectations across the sector.
Second-order effects
- With ICO fundraising discredited and equity rounds scarce, surviving startups are forced toward revenue-generating models like exchanges and custody services, directly crowding Coinbase's core business.
- Major finance and tech firms gain pricing power as rescue capital: their checks come with integration demands, steering the startup ecosystem toward serving incumbent institutions instead of displacing them.
Third-order effects
- If the pattern holds, each crypto cycle ends with consolidation around a handful of revenue-proven operators like Coinbase, while the broader sector's funding swings — from the 2021 record quarter to the lean years around it — track asset prices rather than technology milestones, keeping the field structurally cyclical.
The trend: Crypto venture funding is settling into boom-bust cycles keyed to market prices, with each trough concentrating capital and revenue around a few exchanges rather than distributing it across the startup base.