The blockchain investment and development firm said the record investment levels it had observed had echoed a report in October from research group Diar which outlined that venture capital investment in blockchain companies was up by 280% so far in that year, which the group said had had a “positive effect on the overall valuations of blockchain companies”.
“The company witnessed the blockchain sector mature significantly in 2018 and was able to take advantage of a vibrant market at the beginning of the year through a number of new client acquisitions. Following recent market shifts, Coinsilium adjusted its criteria for on-boarding new clients, focusing on businesses for which blockchain technologies are an intrinsic element of their business models. The company continued to make good progress and generate revenue, notwithstanding the slowing of business as a result of increased regulatory scrutiny of the industry and a downturn in cryptocurrency and token prices from July 2018.”
The firm added that all of its investee firms had reported increased user-bases and “achieved growth towards their strategic objectives” over the last year.
Regarding its share price performance over the 12 months, Coinsilium said it ”may well benefit” from improvements in cryptocurrency market conditions, however the medium-to-long-term strategic goal remained to “demonstrate the commercial diversity and solidity of Coinsilium as a business so that, in the future, the share price will more fairly reflect the company's operational performance and potential, much of which remains unconnected to cryptocurrency prices”.
For its investee companies, Coinsilium said during the year that Indorse, a blockchain-based skills validator for professionals, had raised 450,000 Singaporean dollars in equity investments and US$9mln via a token sale as well as rolling out an update of its platform in December.
The company also invested a total of US$83,750 for 65,000 Seed-1 shares in RSK Labs, a smart contracts firm for the Bitcoin ecosystem, which then agreed to be acquired by RIF Labs in November.
For Elevate Health, a firm building a lifestyle monitoring platform for behavioural healthcare providers, Consilium said Elevate had successfully piloted its platform with a user app going live in January 2019 with two pilot projects with Aboitiz Equity Ventures, one of the 10 largest groups in the Philippines, due to be launched in February 2019.
The platform is targeting 100,000 end users by the end of this year, which would represent an equivalent transactional volume of US$500,000 per day.
StartupToken, a Gibraltar registered hyper-accelerator helping entrepreneurs in the blockchain space, reported an inward investment from Blockwater Capital, a leading digital asset fund that focuses on bringing blockchain-enabled projects to real world application.
Blockwater agreed to acquire 7.4% of StartupToken for a total consideration of £193,548.39, valuing StartupToken at £2.6mln and thereby, Coinsilium's seed capital investment at £722,222, an increase of 100% compared to the cost of Coinsilium's original investment.
Another investee company, cryptocurrency trading platform Bundle network, strengthened its collaboration with Istanbul-based start-up accelerator RDC Smartup and in April 2019 will have its co-founders join the Draper university programme, a Silicon Valley-based school for entrepreneurs founded by renowned venture capitalist Tim Draper, whose past investments include Skype and Hotmail.
Coinsilium has invested around US$125,000 in Bundle Network.
Looking to 2019, Coinsilium said one of its key priorities would be “demonstrate to the market the quality and potential” of its portfolio firms, as well as diversifying its interests in the blockchain sector.
TReagrding seed-accelerator programmes, the firm said it would be “looking to enter strategic commercial relationships with certain existing and newly established global seed accelerator programs” as well as expanding its own B2B accelerator offering to other regions in 2019.
“The company's regional approach will allow it to optimise revenue streams by choosing to operate in areas that can show the greatest market growth potential. Stakes in these businesses tend to perform strongly, as the local management teams are well suited to support the start-ups in their programs”, it added.
For its advisory services arm, Coinsilium said the business was “adapting to lower demand in the utility token space whilst preparing itself for an increasing interest in Security Token Offerings (STOs) or Digitised 'Smart' Securities”.
The company added that it expected regulatory issues around STOs to be resolved following the introduction of new regulatory frameworks, with Gibraltar set to implement new token regulations in 2019.
Increasing its presence in Gibraltar
Consilium said it would be increasing its presence in Gibraltar, moving the management of core operations, such as its advisory services division, there from London.
“In addition to identifying Gibraltar as a jurisdiction providing a higher level of regulatory certainty for blockchain and cryptocurrency businesses, the objective is also to reduce the costs of operations, enabling Coinsilium to allocate more resources towards investments and the provision of revenue generating activities such as its accelerator and advisory services. In this regard, in Q1 this year, Coinsilium's executive chairman Malcolm Palle will be relocating to Gibraltar in order to oversee the establishment of Coinsilium's permanent presence and ongoing operations in the jurisdiction.”
The company also said it was exploring “alternative models to maximise the shareholder value” for Flowstone Capital, a private-crypto fund it set up in Gibraltar in October 2018.
The group added that it was revising its development strategy for TerraStream, another Gibraltar-based subsidiary focused on token-based alternative funding solutions, saying that “emerging STO or Digital 'Smart' Securities environment will be more conducive for TerraStream's development, where we see potential opportunities through the provision of enabling technology solutions”.
Eddy Travia, chief executive of Coinsilium, said: "As the blockchain industry matures, it is starting to attract an increasing number of well-funded institutions and Coinsilium's track record of identifying high quality early stage opportunities, such as RSK and Factom, is well known in the industry.
“As a company, Coinsilium is exceptionally well positioned with a robust financial model and an ability to leverage shareholder returns at an exciting time in the blockchain industry. However, we recognise the challenge that the market has in valuing early stage blockchain-based companies, particularly as there are so few benchmarks. That said, the sector has seen some remarkable valuation uplifts in relatively short timescales as companies have proven their viability. Therefore, we will work to ensure that Coinsilium's market valuation better reflects the value of our current business and its future potential in 2019”, he added.
In mid-morning trading Monday, Coinsilium shares were around 4.4.p.
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