Author: Jiang Xiaoyu
Source: Carbon chain value
At the end of October 2019, the blockchain was established by China's top leaders as "an important breakthrough in independent innovation of core technologies", and the concept of "industrial blockchain" became hot. But strangely, the popularity of the "industry blockchain" concept did not immediately bring a corresponding investment and financing boom. On the contrary, compared to the first half of the year, China's blockchain investment and financing in the second half of 2019 has fallen into a downturn.
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"The status of the blockchain is up, but I haven't invested in a project for several months." This is the recent normal state of many blockchain investment managers.
What is the reason?
Blockchain industry mutation
We should realize that since October last year, the "blockchain" industry has been structurally divided into two parts. One is the alliance chain business that is strongly supported by the government and can quickly land among enterprises; the other is following the route from Bitcoin to Ethereum and developing all the way to the current public chain ecology. For various reasons in history, before October last year, "blockchain" was almost equivalent to "public chain" in the context of media.
With a series of public statements made by the Chinese government last October (improving blockchain technology and suppressing virtual currencies), the survival situation of the public chain has not improved, but the alliance chain has entered the “blockchain” industry very strongly There is even a tendency to be "anti-customer oriented." Then, we better analyze this issue from two perspectives, namely, the public chain business and the alliance chain business.
Public chain investment "extinguished"
There is no doubt that the current public chain ecological investment, especially the domestic public chain ecological investment, has fallen into a "fire out" state. There are many reasons for this "extinguished" state.
The first is that since August 2019, the price of bitcoin has stayed below $ 10,000 for a long time, and the minimum even reached $ 6,400. For currency circle funds that focus on public chain ecological investment, most of them own digital currency assets, especially bitcoin assets. The slump in the price of bitcoin directly led to a lack of money in the currency circle, so it was impossible to invest as much as in 2017-2018.
Secondly, the bottom of the public chain has been slow to see major technological breakthroughs, and has not been able to create a new business or economic model. Therefore, even if there are some idle funds in the hands of the funds that you want to invest in, you can't find the favorite investment target for a while, and therefore the funds are idle.
Third, the current blockchain investment is completely different from 2017. In 2017, "blockchain" and "cryptocurrency" belong to very new concepts, and no one knows how the business model should go. Coupled with the huge wealth-creating effect and the constant influx of money, the angel round and seed round have a large amount of financing. In 2018, it was a peak year. The number of China's blockchain financing reached 349 and the amount exceeded 17 billion yuan. By 2019, the crazy investment in the first two years has gradually come to an end, and some of the business models have also been explored. However, many things that many project developers have given to investors have not been realized. Therefore, those investors who really want to see the value of the public chain can only choose to wait patiently-they must wait for the public chain that has received the investment to hand in some results before there will be the next round of investment. The investment of public chain ecology has gradually shifted from early to middle and late stages. The overwhelming seed round and angel round financing have disappeared, but carefully selected A + rounds and B rounds of financing have gradually appeared. The public chain industry has also gradually moved from a state of early recklessness to a state in which the leader survives and the tail dies.
Fourth, after October 2019, in order to crack down on those who speculate on digital currencies in the name of "national strategy", the government has implemented more severe punishment measures. The founding team of some small leek-slicing exchanges have been arrested, and the media that manipulated the price of air coins and induced the masses to buy and sell air coins were also interviewed or blocked. For the bookmaker, the media, the community and the exchange are indispensable for cutting leeks. Under such a severe blow, funds that originally cut leek through short-term investment and packaging projects will lose their way of making money. China's public chain investment has also fallen into a "fire out" state.
"Unnecessary" investment in alliance chain
Either the east wind overwhelms the west wind, or the west wind overwhelms the east wind. The public chain investment has gone out, and the alliance chain should be very hot right?
It is embarrassing that the alliance chain does not require investment.
The "alliance chain does not need investment", which is not to say that the team that has switched from the public chain field to the alliance chain field does not need investment. On the contrary, many such teams want to get financing, but the reality is not satisfactory.
In fact, before the public chain team turned to the alliance chain field, there were a lot of giants in the alliance chain field: Ant Financial, Tencent, Weizhong Bank, Baidu, JD.com, Xunlei … As early as the digital currency market in 2017 was crazy, these Traditional Internet giants are already building their own blockchain teams. Maybe in 2017, these Internet giants can still be laughed at by the public chain circle "don't understand blockchain", but in 2019, the situation will be completely different.
It is true that the needs of various local governments and major state-owned enterprises for "chain reform" (industrial blockchain transformation) are huge, but what they most recognize, are most familiar with, and are not the first to reach the alliance chain from the public chain circle The business team, but the original Internet giant. For example, Ant Financial now has a blockchain development team with up to 300 people, and the number of blockchain patents it has applied for ranks first in the world. In addition, Ant Financial has developed a complete set of blockchain products, has a group of excellent product managers and promotion sales staff. Such strength is not comparable to those of a small team that leads several developers.
In addition to these Internet giants that have already settled, many listed companies themselves can also perform "chain reform" services, such as the famous block chain concept leader "Far Light Software".
High light software established a blockchain technology research team as early as 2015 to promote the layout of the blockchain in terms of technology, applications, cooperation, and capital. Based on the self-developed blockchain application service platform, the company has developed products such as supply chain finance, electronic contracts, distributed energy transaction settlement, and blockchain logistics traceability. State Grid Henan and State Grid North Hebei have launched cooperation to pilot the application of blockchain technology. Among them, the “Distributed Photovoltaic Settlement Project Based on Blockchain Technology”, which was co-constructed with China National Offshore Electric Power Co., Ltd., won the trusted blockchain high-value case in 2019.
In addition, according to the semi-annual report of Yuanguang Software in 2019, the company went online to complete the "Chain-linked Supply Chain Finance Project" and "Shanghai Distributed Photovoltaic Project"; it won two bids for Shandong's two science and technology projects "Optimization of Settlement of Electricity Purchase and Sale Fees Based on Blockchain for Factory", “Distributed photovoltaic settlement”, “Henan data security sharing project”; completed the “Shanghai Electric Benefit Chain Project”, “Hunan Blockchain Internal Model Market Project”, and “Hoccai Traceability Project”, which are now in the platform construction stage. Thanks to the rapid expansion of the blockchain business, in the first half of 2019, the revenue of the high-light software blockchain and artificial intelligence business reached 16.25 million, a year-on-year increase of 393.61%.
These data come from the government's public statement in October 2019. After October last year, the number of high-tech software's blockchain service orders has increased significantly. Some media broke out, and the company's programmers responsible for the blockchain business were working crazy overtime near the New Year. "The demand is really too great."
Compared with big Internet companies such as Ant Financial and listed companies such as Guangguang Software, the small team in the alliance chain transition from the public chain has obvious shortcomings. Previously, they have been proud of blockchain technology and expertise. But technicians can spend money to dig them out, and after more than two years of training in the market, blockchain development can no longer be considered a scarce resource. So technology can no longer be used as a strong competitive advantage. On the contrary, because most of the procurement of blockchain services are local governments and state-owned enterprises, government resources, to G sales and services have become a very valuable capability for alliance chain companies, but this is exactly what small teams lack.
This is why, many original public chain teams who want to do "chain reform" have encountered such a situation: I talked to a local government about a list, and I feel that the talk is very good, but I didn't expect that in a blink of an eye, this list actually gave The old government relationship.
Therefore, these small teams that transform the alliance chain want to get money from the management, but it is not that easy. However, big factories like Ant Financial and public companies like High Light Software do not need to take money like startups.
This is probably why, since October 2019, domestic blockchain investment has been so sluggish.
Who can get new investment?
Has the industry fallen into an investment depression since then? That may not be so.
In fact, although the number of investments in the blockchain field has decreased significantly since October last year, some companies have still received financing, and the average amount of each investment is not bad.
After sorting out, the value of the carbon chain divides these batches of invested companies into three types:
The first is the essence of the old currency circle (public chain ecosystem). Most of them got investment a long time ago, went through the market reshuffle, and finally received greater recognition in the circle, such as the parent company of KEY GROUP. In general, the founding teams of these companies have accumulated considerable wealth and connections in 2017, established a foothold in the industry, and players who are new to the game in 2019 are no longer a heavyweight.
The second is the team (mostly technical team) who can make full use of university resources. Although they failed to catch up with the wealth-creating tide of 2017 to achieve richness, in the industry environment where the alliance chain divided the blockchain into half the sky, its strong college resources could become a weapon for cooperation with the government. For example, Chengdu Lianan, which recently received Lenovo and Fosun High-Tech Investment, whose founder Yang Xia is an associate professor at the University of Electronic Science and Technology of China; the Shutu Blockchain Research Institute, which is supported by the Shanghai Municipal Government, is behind the well-known domestic public chain Conflux Its founder, Long Fan, is a professor of Toronto, and the chief scientist of the research institute, Yao Zhizhi, is the only Turing Award winner in China; Chengyun Technology, which has obtained the strategic investment of FunChain, belongs to the "Zhejiang University" …
And what are the business characteristics of these invested companies?
One of the most obvious features is that they do not emphasize the issue of coins. Yang Xia, the founder of Chengdu Chain Security, once said that because of the refusal to issue coins, Chengdu Chain Security has rejected 20 million investment; what Chengyun Technology does has nothing to do with the public chain, so there is no currency; Conflux as a public chain naturally has Currency, but they have not yet landed on any exchange, and according to the value of the carbon chain, they currently have no clear plan on this matter.
Another characteristic is that their business has more or less cooperation with the government. City Cloud Technology directly serves smart cities. To put it plainly, it is to take orders from the government. Ms. Yang Xia, the founder of Chengdu Chainan, told the value of the carbon chain that Chengdu Chainan is actively deploying industrial blockchains. "The Beosin one-stop blockchain security platform we developed will provide industrial blockchain with multiple products from secure design and development, formal verification, runtime security monitoring and supervision. In addition, we will also provide big data The combination of AI technology, blockchain technology, and data analysis of mainstream digital currencies, research and development of the world's leading AML anti-money laundering system, has provided regulatory authorities with investigation and evidence collection services, assisted relevant departments to crack dozens of major incidents. Assisted security Regulation is a very important business for us in the future. "
Is this still the path taken by the traditional currency circle? Obviously not.
The last is a small company that has strategic significance for the giants in the circle. It is almost impossible for these small companies to become giants themselves, but at the same time they occupy strategic positions for giants in the circle, and may eventually be strategically invested or integrated acquisitions, such as Binance ’s strategy at the end of December last year Invest in cryptocurrency derivatives trading platform FTX. However, this part of the investment is relatively limited. If the bottom layer of the blockchain does not achieve a breakthrough and break out of a new world, based on the current industry structure, most of the market segments in the blockchain field have actually passed the "occupation" period, and only a few areas can still accommodate it. New entrepreneur.
Among the three companies that can get investment, the technical team with college resources is worth our attention. The occupancy period has passed, the old-fashioned essence is almost a foregone conclusion, and the increase in the market has finally flowed to those players who "carry capital into the group." Unlike the wild and rash people who entered the circle in the early days, they brought China's highest academic qualifications, academic resources, and government contacts into the field. Such a process is actually a process of gradually formalizing and washing the blockchain circle.
Who will come in and invest?
The last question is who will come in and invest.
If the price of bitcoin returns to US $ 20,000, in such a crazy and hype-filled market, the sufficient coin circle capital will definitely enter the market again. However, if the price of the currency continues to be low (for example, the price of bitcoin will continue to be less than 8,000 USD after halving), it will not only be impossible to have a wave of investment in the currency circle, but even the ecological sustainability will be a problem.
We cannot just look at the stock of funds. In fact, if the public chain ecology wants to flourish, it must let old money enter the market. Therefore, the hope of this wave of blockchain market is not in the old capital, but in those traditional capitalists who have been researching and waiting on the blockchain for a long time, among which Fosun Hi-Tech is the most typical.
As early as March 2019, Liang Xinjun, founder of Fosun Hi-Tech, was optimistic about the blockchain in a public speech. Unlike the Internet people who entered in 2017 (most of these people are failures of Internet entrepreneurs), they are not temporarily enthusiastic about blockchain. They did not have any three o'clock group, nor did they follow the currency price anxiety, nor did they go to issue coins to cut leeks. After watching for two years, after witnessing the ups and downs in the blockchain field, they aimed at those blockchain companies that have withstood the market and are doing well.
The arrival of traditional capital will inevitably have a significant impact on the blockchain ecosystem. The perspective of the currency circle capital is often limited to the blockchain and digital currency itself. The projects they invest in basically serve transactions and speculation. Traditional capital attempts to interpret blockchain from a larger narrative perspective. For example, they can often put blockchain and emerging technologies such as AI and cloud computing together to build a grand story that is related to human life. Blockchain is only part of the future grand technology picture. Traditional capital needs to figure out what part it invests in, not to follow the currency price gambling. The huge differences in investment thinking may make traditional capitalists reduce the dimensionality of currency capital.
Of course, old money is important, and those giants or groups that already exist in the feasible industry cannot be ignored. Large companies like Bitmain, Jianan Yunzhi, Binance, Huobi and OK have rich cash in their hands, and they may make strategic investments at any time according to the needs of their business. However, what deserves our attention most is the cooperation with local governments.
After the ups and downs of 2018 and 2019, these giants have moved away from small workshop management methods in commercial operations, but because their businesses are mostly related to digital currencies, this part of the business is still more delicate in the government ’s view So the situation is awkward. To become a real giant, it is not enough to have revenue skills and business scale. To G will definitely become the focus of these giants' operations this year. If they can overcome this obstacle in the past, they can become intermediaries that open up the public chain ecology and traditional funds, benefit from two places, and make the ecology bigger and bigger; if they can't overcome it, they are likely to be confined to the currency circle. In the end, they cling to those giants who have won, and are even harvested by the latter.
At this point, Shanghai's Wanxiang Blockchain Lab can be regarded as a model for industry giants. Its chairman, Xiao Feng, was praised by Liang Xinjun as the "godfather" of the Chinese blockchain industry. He not only invested in Ethereum himself, but also provided a set of learning logic for traditional capital. In other words, he can not only influence the public chain circle before the regular army enters the field; after the regular army enters the field, he can also guide the way for the regular army and continue to influence the development direction of the public chain circle thereafter. We must not ignore the role that such characters play in introducing capital flows to the public chain and in formalizing the blockchain industry.
Since October 2019, there has been a structural adjustment in the development pattern of China's blockchain. The focus of development has expanded from the original public chain circle to a situation where the public chain and the alliance chain are parallel. The government is also participating in the development of the blockchain industry in a new way. In addition to acting as regulators of virtual currencies, they are also providers of alliance chain orders.
Through this article, we can find that although the slogan of "industrial blockchain" resounds the land of China, the living space and growth space of small and medium-sized entrepreneurs are slowly shrinking. The entry in 2017 can still be "reckless", which can accommodate the losers in the Internet industry; and the entry in 2020 requires "to bring funds into the group." If you want to be a waver in this wave of blockchain, your own resources (college resources, government background, and large enterprise support) are more important. As for the technology that everyone has been advocating before, it can be placed in a lower position, because the technical talents themselves follow the capital and resources.
Therefore, if you still want to enter the game at this time, it is better to think about what you have and what you can bring to this circle. As Li Xiao said, this wave of getting rich has nothing to do with ordinary people.