A report from last week in the Information states that ConsenSys is in the process of raising up to $200 million from outside investors. Apparently, ConsenSys is slapping a $1 billion valuation on the offering. So is it worth the money? It is too hard to tell.
The same report states that ConsenSys generated top-line revenue of just $21 million during 2018 placing the company at a very aspirational level for potential investors. A leaked pitch deck reported that ConsenSys has an annual burn rate of $100 million so it is spending money 5X faster than it is coming in. Revenue IS predicted to grow to over $50 million during 2019.
ConsenSys is the creation of Joe Lubin – an Ethereum founder. Reportedly, Lubin plowed some of his crypto wealth into the ConsenSys ecosystem which seeks to create a soup to nuts type platform incubating multiple projects while investing in other blockchain focused startups. ConsenSys provides a “constellation” of financial services such as advisory and funding for crypto companies. Lubin is one of the biggest champions of crypto and Ethereum specifically. He recently stated:
“As we tokenize the world, well-resourced financial houses and traders will spare no effort to manipulate markets for gain or political advantage. We don’t want the liquid deep token markets of the next generation economy to be similarly vulnerable. We must not choose anything other than a maximally decentralized base as the foundational settlement layer of the global economy.”
But ConsenSys has not been without its challenges. At the end of 2018, it was widely reported that ConsenSys was firing certain employees and ending certain projects that had been deemed non-starters as it refocused its energy on more promising paths.
One of ConsenSys’s biggest challenges is arguably Ethereum itself. The blockchain has been in the throes of attempting to migrate away from costly Proof of Work to a future of Proof of Stake. There is also a performance issue as newer distributed ledgers emerge to challenge the old guard innovators by learning from the missteps of these digital trailblazers.
But Lubin remains resolute in his belief that his vision, and Ethereum in general, are on the correct path to a future of tokenization and decentralization.
“Casper proof of stake will bring breakthroughs in scalability, while enabling the network to be more decentralized and therefore more secure. Casper on the Ethereum Beacon chain is live on testnets now, and the 8 teams building their own implementations of the protocol should be in sync on a shared testnet within a small number of months.”
Casper to Shasper
Ethereum 2.0 seems to be moving closer to reality, thus possibly saving Ethereum from decentralized irrelevance.
It will be interesting to see how ConsenSys’s funding round goes. Soon after money is received, ConsenSys must file a document with the Securities and Exchange Commission providing some insight into investor support of the offering.