Financial services, healthcare, and energy are the primary focus industries for blockchain development in Europe.
Ethereum, the second-largest network by market capitalization, is the base layer for almost a third of decentralized ledger technology (DLT) startups coming out of Europe.
While European corporations are increasingly adopting the emerging tech, funding figures from the region are still significantly below the numbers seen in places like the U.S. This investment deficit could potentially open doors to non-European VC firms looking to put up equity in local blockchain startups.
Ethereum Dominates Europe’s Blockchain Startup Scene
In its Enterprise Blockchain 2020 report, European VC firm LeadBlock revealed that Ethereum is the leading network for enterprise DLT startups in the region. Figures from the report show that 27% of blockchain startups in Europe build their solutions on the Ethereum base layer.
Ethereum aside, Hyperledger, Corda, and two other popular protocols engage with European startups. According to the LeadBlock report, the competition among these networks is helping create a more mature DLT tech ecosystem in Europe.
In addition to building blockchain-based solutions, the Paris and London-based LeadBlock teams reported that 70% of these startups also combine DLT with at least one complementary tech like artificial intelligence (AI), internet of things (IoT), and Machine Learning. An excerpt from the report reads:
“We view Blockchain technologies as an enabler becoming particularly powerful when combined with other technologies. Start-ups leveraging convergence are more likely to create long term value because of tech complementarity.”
E.U. Lags Behind the U.S. in DLT Investment
From a funding perspective, LeadBlock says European startups lag behind their U.S. counterparts. Indeed, America reportedly accounts for half of all global blockchain investments. As a result, DLT startups in the U.S. hold 20 times the total assets under management (AUM) of Europe-based blockchain firms.
The funding problem for European blockchain startups results partly from a lack of understanding of either the technology or the focus market segment of the company. Some investors also reportedly have trouble understanding the difference between blockchain and cryptocurrencies.
According to the report, the European blockchain ecosystem requires greater investment participation from VC firms. In terms of growth, the region is witness to over 500 new startups per year. About 6,000 founders lead a diverse collection of project teams looking to create cutting-edge solutions.
Healthcare and Agriculture Becoming Major Focus Points
Finance is still the main adoption channel for blockchain in Europe. Given that the earliest DLT implementations focused on payments, it’s no surprise that the novel tech is finding greater use in the financial services sector.
Finance accounts for 28% of European enterprise startups. Healthcare, Energy, and Agriculture are the other major focus points for blockchain development in Europe. Together, all four industries make up almost two-thirds of the collective European enterprise DLT adoption.
Corda is the leading infrastructure platform for blockchain-based financial service applications in Europe. Hyperledger accounts for the majority of the activities in the agriculture industry, with most of these projects focusing on food traceability.
The focus for European enterprise DLT devs appears to be tokenization. Thus, Ethereum is leading the way in industries like real estate and the arts.
On the whole, the LeadBlock report indicates a growing appreciation for enterprise blockchain use in Europe. According to the document, the current trend of corporate DLT adoption is replacing the digital asset craze of the early days.
As previously reported by BeInCrypto, a recent Deloitte survey showed that the novel tech is gaining wider enterprise adoption across the globe. Deloitte said that more than one-third of global organizations use blockchain in their operations.