The old adage “the bigger they come, the harder they fall” may well apply to once-favored Ethereum giant ConsenSys. Joe Lubin, ConsenSys CEO and Ethereium’s Co-Founder recently announced a $200M funding round in order for ConsenSys to keep its lights on.
In its heyday, ConsenSys was one of the largest US-based crypto companies. It grew to 1,200 employees within two years. It had Ethereum by its side as its preeminent voice of the cryptocurrency network. ConsenSys events were highly coveted by the majority of crypto-conference-goers in the US and abroad.
In 2018, ConsenSys reported revenue of only $21M drawn mostly from its enterprise consulting. Yet, based on this, the company sees its valuation as being $1B, a number many say is unrealistic given the company’s revenue to expense ratio. ConsenSys, however, is projecting revenue for 2019 to be around $40M from contracts with government and enterprise clients, and some from software products. Until now, ConsenSys has been primarily funded by its founder, Joe Lubin. Add to this the uncertainty of a company restructure and charting a new course just months after its layoffs. What will this new business model entail?
In 2019, as we enter the new phase of the market cycle, with increased scepticism of crypto and blockchain, the stated $1B may not fly. As broad as the ConsenSys portfolio may seem, many of their subsidiaries don’t generate income; their primary purpose is to provide services for the Ethereum blockchain network.
I wouldn’t be planning on a lavish 2019 holiday party just yet.
Published May 15th, 2019