Blockchain technology: the next challenge for startups and investors

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Lead block Partners has just unveiled “Enterprise Blockchain 2020”, a report compiling more than 9,000 data points on the financing, development, and prospects of blockchain technology.

From the rubble of a crisis, great innovations and technologies often emerge. After the global financial crisis of 2008, many people quickly lost confidence in the financial institutions on which we relied. Currency rates fell, and in some countries cash supplies were even frozen. People then called for the decentralisation of financial services and transactions, which the blockade could respond to.

In the decade since its launch, the blockchain has had its ups and downs. The Bitcoin crypto-currency, one of the first decentralised currencies to emerge as a result of the blockchain – reached its record value in December 2017, valued at just under $20,000, before its valuation collapsed to $7,000. The technology has spread across different industries, well beyond the financial sphere. Health, energy, food and agriculture are some of the sectors that have seen innovations in the block, thanks to a growing ecosystem of startups.

The transparency, profitability and potential social impact of the blockchain have boosted interest in it. However, this ecosystem is still under-exploited. Enterprise Blockchain 2020, a recent report produced by the investment fund Leadblock, gathers data collected by more than 200 blockchain startups around the world, measuring criteria such as investment, impact and diversity. The report is categorical about the opportunities for entrepreneurs and investors. This technology could well be, according to some, as disruptive as the internet.

Improving the understanding of blockchain
While the potential impact of the blockchain is clear, the technology itself is not. Some of the statistics in the report highlight the lack of understanding surrounding it: 80% of investors are not familiar with it and 60% do not even differentiate between blockchain and encryption.

Assessing the impact of blockchain startups
Asked what the block chain means to them, the founders of startups answer first and foremost, cost reduction (42%), immutability (28%) and adaptability (28%). Beyond profitability, transparency and trust are the two factors that allow the block chain to have such an impact. “By simplifying the value chain, you are able to bring much more transparency,” explains David Chreng-Messembourg.

According to the report, finance remains the top sector in which blockbuster startups are positioned (28%). But it influences many other industries where, like finance, trust needs to be restored. Health is the second most popular sector, with 11% of blockchain startups. The report highlights the lack of profitability in drug manufacturing, particularly in clinical trials and supply chains. The blockchain could improve this “co-petition”, i.e. collaboration between competitors, while protecting patient data. Energy (10%), agriculture (7%) and food (7%) come next. The blockchain has a major role to play in the agro-food sector, in particular. L

Impact is also a crucial element in the success of the blockchain. One of the key success criteria indicated by the report is the ability to meet one of the 17 UN Sustainable Development Goals (SDGs). Each startup is judged on its ability to meet one or more of the SDOs, through its mission or industrial specificity. Apart from the general objectives (objective number 8: decent work and economic growth, objective number 9: industry, innovation and infrastructure), the most well-known objectives are related to climate change, sustainability, responsible consumption but also health.

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