2021 has been a banner year for European blockchain startups so far. This year, VCs have funnelled €2.6bn into Europe’s blockchain startups, more than 4x 2020’s funding and as much as what has been invested in the more traditional sector of insurance.
The figure is largely thanks to megaraises, such as football NFT trading card startup Sorare’s monster $680m Series B and Viennese crypto trading platform Bitpanda’s $263m Series C.
With blockchain funding at an all-time high globally, we asked five investors to nominate the startups that are set to follow Europe’s blockchain heavyweights. The only catch — they had to be non-portfolio companies.
These are the startups they chose.
Vladislav Shadrintsev — investment analyst at iTech Capital
iTech Capital is an investment firm HQ’d in Moscow, with offices in Cyprus and Latvia. It primarily invests in crypto, fintech and adtech and has raised two unicorns — Bitfury and TradingView.
1inch — remote across Europe
This is a decentralised exchange aggregator that helps users discover the best trade prices for tokens. Instead of swapping tokens from a single liquidity pool from one decentralised exchange, 1inch will aggregate across different pools and suggest the most efficient way to trade your tokens. It works as a metasearch engine and helps you to use your crypto more effectively. At present, it has around $300m in daily trade volume and is growing fast. Additionally, 1inch has its own foundation, DAO (decentralised autonomous organisation) and even a wallet. It supports all well-established blockchains such as Ethereum, Binance Smart Chain and many Layer 2 solutions.
Syntropy — Lithuania
The company offers technology that is compatible with current internet infrastructure and its protocols but introduces a crucial layer of programmability. This enables more efficient utilisation of resources. It removes bottlenecks and limitations of the existing system, ensures security and optimisation by default and unlocks greater scalability for future technologies and applications.
In simple words, it helps to improve the quality and speed of internet connections so enterprises can interact with their customers without any latency. Syntropy already has multiple promising pilot projects with Starlink, Microsoft, AWS, etc.
Aleph.im — France
This is an open-source crosschain network featuring a decentralised database, including file storage, computing and a decentralised identity framework. Aleph.im’s core mission is to help decentralised apps and protocols strip off the centralised parts of their stack — achieving a fully decentralised architecture. This is seen as especially crucial for upcoming Web 3.0. era. You can think of Aleph.im as a decentralised AWS (Amazon Web Services) or firebase. Aleph.im is focused on supercharging the DeFi ecosystem and is already compatible with many leading blockchain projects, including Ethereum, Polkadot, Cosmos and BinanceChain.
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Humanode.io — global but mostly Eastern Europe and Georgia
Humanode.io is a public, permissionless financial system based on consensus between equal human nodes, with rule-based monetary policy targeting real value growth and proportional emission. In other words, they develop an alternative blockchain with the highest level of decentralisation. All commonly-used Proof-of-Work (BTC, ETH) and Proof-of-Stake approaches still have a lot of drawbacks including mining cartels, validator oligopolies, etc. All nodes in the Humanode network are created through a unique biometric validation and are equal in terms of validation and voting power, bringing true equality between peers in decentralised networks. One person, one vote.
zkSync — remote but mostly Eastern Europe
zkSync is a trustless protocol for scalable low-cost payments on Ethereum. It's powered by Zero Knowledge Rollup technology, known as zkRollups, that increases Ethereum scalability. It also uses zero-knowledge proofs and on-chain data availability to keep users’ funds as safe as though they never left the main net. One of the reasons why it might be interesting is because of high-fees on Ethereum which at present are not affordable for most users (it happened mostly because of the rise of ETH price and limited scalability of the network).
zkSync solves this problem by presenting a Layer 2 solution with cheaper and faster transactions above the main ethereum network. In addition, the rise of DeFi opens many more interesting use cases and zkSync can be easily integrated with any decentralised application. zkSync has already successfully raised an equity round in the beginning of 2021 from USV and numerous other strategic partners.
Min Teo — managing partner and cofounder of Ethereal Ventures
Ethereal Ventures is an early stage investment firm focused on backing technical founders building crypto products and protocols. The team comprises the former investment team of ConsenSys, was founded this year and is currently in stealth.
Token Terminal — Nordics
Token Terminal is a platform that aggregates financial data on the leading blockchains and decentralised applications. Its long-term goal is to work together with users, be it project teams and communities, investors, analysts and other stakeholders, to build out the most robust and useful investment analysis toolkit for the crypto markets. With globally connected 24/7 lightning fast crypto markets, it's critical to have access to accurate, on-chain financial data to make on-demand financial decisions. Token Terminal democratises this data to the rapidly growing group of crypto traders, both retail and institutional alike.
Nexus Mutual — UK
Nexus Mutual is a digital cooperative that operates as a decentralised insurance mutual. It is built on the Ethereum blockchain. People who join the mutual become members, and members can buy cover to protect themselves against hacks in smart contract code.
Members hold tokens that represent membership rights and entitle holders to participate in governance decisions and capital provision to the mutual. While smart contract insurance is a necessary tool for any blockchain application, it's not widely available from traditional insurance players due to complexity in underwriting. Nexus Mutual helps to protect user assets as they experiment with Web3.0 apps.
Radicle — Germany
Built on the Ethereum blockchain, the project describes itself as an ‘open-source, community-led, and self-sustaining network for software collaboration’. By allowing developers to host and manage open-source software projects on a decentralised network of nodes owned by their peers, instead of centralised platforms like GitHub, precious code is fortified as censorship resistant and persistent. Through features such as decentralised name registries, user owned code repositories, community funding and governance of open source projects, Radicle is making open source development sustainable and accessible to developers across the globe.
Charlie Boles — senior associate at Speedinvest
Speedinvest is an early-stage European VC firm headquartered in Vienna. It primarily invests in fintech, deeptech and SaaS startups.
Angle — France
Angle is building the first decentralised on-chain Euro stablecoin. The protocol is designed to attract three key participants: 1) stablecoin users who want to easily access stable assets, 2) hedging agents who protect against volatility to ensure the stability of the stable assets and 3) liquidity providers who want to earn high interest yield on their deposited assets. This flexible design will allow Angle to support numerous stablecoins with different collateral types, starting with its Euro stablecoin backed by USDC and DAI — both stablecoins backed by the US dollar.
The rise of stablecoins over the last 12 months has been incredibly exciting, as it enables so many different applications from savings to hedging to low-cost payments. The only concern is that a lot of the growth has been with centralised stablecoins (like Tether and USDC). These stablecoins require trust in a centralised company to hold the assets in reserve, which is incongruent with the ideological goal of many cryptocurrencies to remove the need for trusted third parties. Decentralised stablecoin projects like Angle offer the promise of a more congruent, decentralized future.
NFTX — UK
NFTX is a platform for creating fractional shares of NFTs (non-fungible tokens). Users can deposit their NFT, like a CryptoPunk, into a NFTX vault and mint fungible ERC20 tokens — the token used for all smart contracts on the Ethereum blockchain. These represent a proportional claim on the asset in the vault. The inherent scarcity of NFTs can lead to inaccessible prices for blue-chip NFTs for many users. NFTX solves this problem by creating fractional shares of high-quality NFT projects, allowing users to gain exposure and increasing liquidity for asset owners. This increase in liquidity also allows for better price discovery and the creation of ETF-like funds for a portfolio of NFTs. These innovations support the healthy growth of NFT ecosystems by lowering the barriers to entry for new users.
Cap Finance — Europe
Cap Finance is a decentralised perpetuals trading platform on Arbitrum, an Ethereum-based Layer 2 scaling solution. By leveraging Arbitrum, the non-custodial solution allows traders to take positions that execute in seconds for negligible fees, a dramatic improvement over Layer 1 platforms, with the added benefit of decentralization. Since the Aribitrum mainnet launch at the end of August, Cap Finance has traded over $75M of volume.
Zihao Xu — principal at Octopus Ventures
Based in London and New York, Octopus Ventures is one of Europe’s largest VC firms. It primarily invests in healthtech, fintech, deeptech and B2B startups.
Superfluid — UK
A big promise of crypto has been to create an open protocol for financial value transfer, and in an ideal world, financial value ought to flow proportionally and simultaneously to the value for which it is being traded. To date, society has approximated this through scheduled triggers of individual transactions typically processed on third party ledgers (think payroll, or a Netflix subscription). Superfluid will allow us to programme any structure of value transfer to match any set of needs one could imagine.
Rvvup — UK
The DeFi world is coming, but most assets are still tied up in the CeFi world. Without the liquidity and discipline that typically comes with ‘wholesale money’, DeFi will likely remain a sideshow and asset pricing will essentially be landlocked, meaning that society can’t extract the functional value it needs from new technologies. Rvvup is building a bridge between DeFi and CeFi.
Coinrule — UK
It’s getting harder to compete with algorithms, especially when it comes to trading market signals. Coinrule puts the power of trading algorithms in the hands of normal investors. Those of us old enough to remember AA Road Atlases chucked in the boot will recall that they usually got us where we needed to go, but we’d be silly to turn down directions on Google Maps today. The same thing should probably apply in many other domains, including day-trading crypto.
Helga Valfells — founding partner at Crowberry Capital
Located in Reykjavík, Iceland, Crowberry Capital is a VC firm that invests in Nordic seed and early-stage startups.
Aztec — UK
Aztec is bringing privacy to the blockchain which is fundamental for mainstream adoption. Aztec operates as a scaling solution for Ethereum and is a security shield for the internet of money.