Financing momentum for bitcoin startups is fading after an all-time high earlier this year, with deal activity in the space falling to a five-quarter low in the third quarter of this year.
This is according to new data released by CB Insights, which reports funding fell for the second consecutive quarter to US$87 million.
This in spite of investments hitting an all-time high earlier this year, with the State of Bitcoin Q1 2015 report released by CoinDesk reporting the first quarter of this year saw a record amount of venture capital ploughed into bitcoin companies globally.
CB Insights, however, now reports investments have lost momentum, with the drop in overall deals coming in spite of larger financing deals for startups focused on use cases for bitcoin’s underlying distributed ledger technology, the blockchain.
“While overall deal and funding levels have dropped, the ecosystem of startups is now maturing to more mid-stage financings,” CB Insights said.
African startups benefitted from the growth in interest in bitcoin, not least the sizeable round raised in February by African bitcoin remittance startup BitPesa. In July, Kenyan digital currency wallet and development provider Bitsoko was also backed, receiving a US$100,000 grant through the Grand Challenges Explorations (GCE) initiative of the Bill and Melinda Gates Foundation.
Confidence was dented in August, however, when Disrupt Africa reported much touted Ghanaian bitcoin startup Beam, launched in October of last year to facilitate remittances, had pivoted. The startup is still alive and well, now allowing Ghanaians abroad to pay for gifts and bill payments back home, but what was key from a digital currency perspective was the scrapping of bitcoin as a means of payment.
It remains to be seen whether bitcoin can yet find its niche in Africa, or globally.