Blockchain startups in Europe are showing signs of re-emerging after a harsh few years of experiencing funding downturns.
The last two quarters saw dealmaking pick up with $386m funnelled into European blockchain startups across 68 deals in the first quarter of this year. That followed landmark legislation coming into force in both the US and Europe which is expected to increase confidence in crypto as an asset class.
Earlier this year, the US Securities and Exchange Commission (SEC) approved 11 bitcoin ETFs (exchange-traded funds). This will enable retail and institutional investors to have direct and regulated exposure to the world’s first blockchain-based cryptocurrency.
In Europe, the passing of the EU’s landmark Markets in Crypto-Assets (MiCA) law in May last year means crypto companies will have clear rules to operate across the European bloc.
Following the regulatory rumblings, we thought it would be a good time to ask some of Europe’s top crypto-focused venture investors for their take on the up-and-coming startups in the sector. The only catch is that they had to be non-portfolio companies — these are the startups they chose.
Ash Arora, partner at LocalGlobe
LocalGlobe is a London-based VC firm focused on seed investments.
Morpho Labs — remote but mostly Paris
Morpho Labs is on a mission to transform financial services for all by building the most secure, decentralised lending protocol on the Ethereum blockchain. Motivated by “making lending a common good,” the platform uses smart contracts – the computer programs used to build applications on blockchains – to match lenders with borrowers before optimising conditions such as interest rates and loan terms in a way that suits both parties. This makes lending and borrowing more automated, transparent and secure. It also keeps costs low and trust high to make financial services more accessible — particularly for the millions of people whom the traditional banking system continues to marginalise. The Paris-based firm recently surpassed $1 billion in deposits and is available via lending wallet, Instadapp – two milestones that are a testament to the trust Morpho has built, and which continue to drive further adoption among a global audience.
Compass Labs — UK
Compass Labs has built a suite of simulation tools that help individuals and institutions build and test trading strategies for decentralised finance protocols. Central to its offering is Dojo, a Python-based platform that acts as a safe and simple simulation environment within an Ethereum Virtual Machine (EVM), the engine powering the transactions on the Ethereum blockchain. Dojo lets users run strategies, based on historical data, to see how they would have performed in the past to gauge how they’ll run in the future. It helps them identify strengths and weaknesses before deploying real funds, as well as integrating with a wide range of protocols to keep users ahead of the evolving DeFi market’s curve.
Mira — remote but mostly Portugal
Founded by two former investors of VC firm Accel, Mira is an innovative open-source AI platform for model and data orchestration. Its mission is to ensure AI contributors can be compensated with crypto tokens when the models, data and workflows they’ve created are used. Through this, Mira is building trust among datasets and models on blockchains, to allow a full audit trail of the API for end users. Mira is starting with the ability to work for 30 datasets but aims to build up to over 100k encompassing both real data and synthetic as the AI industry expands.
Luc Jodet, partner at Xange
XAnge is a European VC firm based in France and Germany.
Swaap — France
France has cultivated a small yet remarkably high-quality DeFi ecosystem. While prominent names like Morpho and Angle garner attention, Swaap stands out as a hidden gem that often goes unnoticed. Despite the growing dominance of decentralised exchanges like Uniswap — which allow users to trade crypto without relying on a central authority — in crypto trading, liquidity providers encounter challenges regarding temporary loss of funds due to a crypto-specific trading volatility issue named “Impermanent Loss”. Swaap addresses this issue with sophisticated market-making strategies that deliver higher yields and reduce the risk of impermanent loss for liquidity providers.
Validation Cloud — Switzerland
In today’s fiercely competitive landscape of blockchain node infrastructure, performance is gauged in milliseconds. Thus, it comes as no surprise that this team hails from Switzerland, known for its precision and excellence. Validation Cloud underwent years of bootstrapping and now its prowess is unmistakable with execution that surpasses all others. Across most geographies, its performance takes the lead by a significant margin, outpacing even better-known — and better-funded — companies like Infura and Alchemy.
Bubblemaps — France
Data visualisation is both an art and a science. It is also big business in web2 and now in web3. Bubblemaps excels in providing a high-performance and aesthetically pleasing platform for visualising and analysing blockchain data. Its applications span from financial tracing to marketing strategy development. They share meticulously researched visual data investigations on some of the most pressing crypto topics of the day on X, formerly known as Twitter.
Lasse Clausen, founding partner at 1kx
1kx is an early-stage investment firm that invests in the crypto ecosystem.
Tenderly — Serbia
Tenderly is a full-stack web3 infrastructure solution that allows users to execute, debug and optimise smart contracts. They can also build and test them on 30+ EVM networks (blockchain networks compatible with Ethereum, one of the most widely-used networks), and monitor events. They have one of the most prominent transaction simulators in the industry and are also known for their gas profiler tooling, which tracks the fees incurred when processing a blockchain transaction. Tenderly is worth watching as a valuable partner to web3 developers as they build and scale, working with industry-leading projects such as Nexus Mutual, Gnosis, and Aave.
Finoa — Germany
Finoa has made its mark as a German-based institutional-grade custody provider. They support multiple networks in their earliest stages and ensure clients’ digital assets are stored in fully segregated wallets with verifiable proof of funds available at any time. They also facilitate storage, staking (the process of locking up crypto to help run a blockchain network in return for rewards) and trading activities for over 180 supported assets, all accessible through a single account. Operating under the regulatory oversight of BaFin, Finoa is helping to drive institutional adoption of crypto across Europe in a tangible way.
BWare Labs — Romania
BWare Labs is an infrastructure and development platform targeted at web3 builders, enterprises and ecosystems. They act as a one-stop shop for many projects in the space, providing value via their RPC endpoints (a URL which blockchain data requests can be sent to), programming software development kits, blockchain indexing, validator and snapshot services. The numerous grants they’ve received over the years from Starknet, Celestia, and Optimism, are evidence that wider communities recognise their value. BWare’s Blast Protocol is a multichain (meaning it’s compatible with a variety of blockchain networks), subscription-based API platform that utilises hundreds of third-party providers to enable turnkey solutions for builders.
Centrifuge — Switzerland
Centrifuge stands out as a platform that has gained significant traction facilitating the tokenization of real-world assets (RWA) on blockchains, bridging traditional financial products into DeFi. By promoting the diversification of stablecoins — cryptocurrencies pegged to a fiat asset like the US dollar — and collateral in treasuries, they make it possible to correlate yields with RWAs. Their fund management platform streamlines portfolio management for asset managers and investment funds by consolidating operations data on and off blockchains. One of the reasons we think they are worth watching is that their recent Series A will be used to scale institutional-grade lending via a market built on Base and integrated with Coinbase verification, thus allowing institutions to quickly and safely participate in RWAs.
Samantha Bohbot, chief growth officer and partner at RockawayX
RockawayX is a web3 VC firm with offices in Prague, London and Zurich.
Ethena — Portugal
Ethena is a synthetic dollar protocol built on Ethereum, alongside what it calls a yield-bearing “internet bond.” Unlike asset-backed stablecoins, like USDT or USDC, Ethena’s USDe token is essentially a structured product. Users mint USDe by depositing other stablecoins and major digital currencies (i.e. bitcoin) on the protocol; they stake USDe to earn yield. USDe’s profits comes from Ethena using a common trading strategy known as cash-and-carry trade. This strategy involves buying in the current market (spot) and selling in the future market (futures) to take advantage of price differences. Ethena runs this at scale and shares profits with USDe holders.
USDe’s yield — hitting 113% in March — has dazzled investors, to the tune of a market capitalisation of over $2BN. There are questions about how it will perform in more bearish environments, when funding rates may turn negative. But its growth has been tremendous and can unleash wider experimentation around what’s possible when you combine decentralised markets and code.
Union — Netherlands
Crypto “infrastructure”: has grown considerably; there are plentiful settlement and execution layers (i.e. built-for-purpose blockchains ) and middleware options, for things like data querying and identity solutions, to support app development. This is generally positive and typical of maturing spaces; they become less vertically integrated, as specialised providers and products enter. But the resulting fragmentation can impair user experience (i.e. if moving an asset across ecosystems is clunky). Interoperability solutions are the fix.
Union lets startups choose what blockchains they want to build on, freeing them from hacking together smart contracts. Its tech stack leverages advanced cryptography—think, data logged smartly, not superfluously— to maximise speed, decentralisation, and permissionless use.
Solutions like Union, that shift our focus from new infrastructure to harnessing what’s already been built are an important step in focusing on what matters: end users and new experiences.
MatrixOne — Portugal
Matrix One’s technology allows people to create AI avatars that can be used in varied online contexts such as Twitch videos, games and metaverses. The project is at an exciting moment as it prepares to launch a decentralised AI character protocol on the blockchain network Solana. Here, participants can easily create human-immersive AI that’s immediately ownership-tracked and can be distributed across applications.
Matrix One’s work is exciting because it’s a useful meeting ground for AI and web3. Considering blockchain technology’s original promise — enabling open, tracked, digitally-native payments — serving AI avatars seems a natural fit. They need reputations and those relationships (i.e. “this avatar delivers this function reliably and well”) could be established and tracked similarly to how blockchain wallets and transaction logs function. This could let users see ownership, use, retention — and a whole new digitally-native social map.
Thomas Turelier, investment director at Eurazeo
Eurazeo is a French private equity and venture capital firm located in France.
Hylé — France
Hylé is building a blockchain focused on verifying zero-knowledge proofs, a cryptographic technology that proves knowledge about a piece of data without revealing the data itself.
The company was only launched very recently but its ambition is to provide a modular settlement layer for ZK proofs using any execution engine or proof system. Essentially, it aims to be able to validate proofs coming from any smart contract even if it’s not processed on a blockchain network.
Kiln — France
Kiln is already a leading player in enterprise-grade staking, allowing crypto companies and products to access or integrate staking most easily. Their staking solution is already integrated with leading crypto products such as Metamask, Ledger, Coinbase and Fireblocks. It also has $7bn+ staked through them, representing 4.3% of the total eth (the currency underpinning Ethereum) staked.
Gleb Dudka, principal at Greenfield
Greenfield Capital is a Berlin-based crypto VC fund.
Usual Money — France
Usual Money is a France-based stablecoin issuer founded by Pierre Person, a former member of the French parliament.It backs their stablecoin “USD0” with real-world assets like short-term treasury bonds. They recently closed a $7m funding round and are about to launch. This is very exciting, as it is one of the few European startups competing with large US conglomerates like Circle, known for its stablecoin USDC, which reported revenues of over $779m for the first half of 2023.
Euler Finance — UK
Euler is a London-based lending protocol that lets people lend and borrow a variety of crypto assets. Each lending market works on its own and can easily connect with other protocols using permissionless integrations. Its liquidation mechanism, which is how it sells off assets, allows it to retain more value within the protocol compared to other methods. It’s raised over $40m in total and last raised funding in 2022.
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