In October, the founder and former CEO of FTX crypto exchange Sam Bankman-Fried (SBF) goes on trial for what is said to be one of the biggest financial frauds in US history. The shockwaves have already scared some people away from all things crypto. But, meanwhile, Bitcoin and other major crypto currencies last month surged to a 12-month high on news that financial institutions were planning major new digital asset products.
The global cryptocurrency market is projected to reach $37.9bn in 2023 (47% in the US) and to have 14% CAGR in the next five years, resulting in a $64.9bn market with 994.3mn users by 2027 (source: Statista). The US crypto market is forecast to grow by 108% in 2023 and the UK by 125%.
As evidence of the simple fact that the scandals have done nothing to scare away the real experts, BlackRock, Fidelity and other leading US asset managers are lobbying the US Securities and Exchange Commission to approve a new form of Bitcoin exchange-traded fund. Meanwhile, a consortium including Charles Schwab, Fidelity and Sequoia, have launched a new crypto exchange, EDX Markets.
The point is that even the FTX scandal has not slowed crypto growth. For mere media people, further proof that this new investment class is an increasingly important business sector came in May when Blockworks – a media company for cryptocurrency professionals – raised $12mn by selling 9% of its equity for an enterprise value of $135mn.
Blockworks self-describes as “a media and information platform that delivers news and insights about crypto to millions of investors. Our editorial site, newsletters, podcasts, conferences, research, and data provide investors with the critical analysis and information they need to make smarter decisions about digital assets. We’re accelerating crypto’s adoption by making its most innovative areas accessible. Our media platform…provides a non-biased, non-tribal view of crypto.”
Significantly, its valuation was reportedly almost 10% higher than the $125mn being offered for the $50mn-revenue crypto market-leader CoinDesk, according to the Wall Street Journal. That 10-year-old media, events, data and indexes business had reportedly once been valued at more than $200mn after having been acquired for $500-600k in 2016. CoinDesk subsequently acquired the Lawnmower blockchain data platform and the TradeBlock analytics firm.
A key highlight of CoinDesk’s media development was nothing less than the expose of SBF in November, leading to his impending trial. But the lack of profitability (especially given the acquisitions) underlines the contrast with Blockworks which has been generating solid profit from revenue that is just 50% of CoinDesk.
The New York-based Blockworks performance tells the story of a bootstrapped digital company launched in 2018 with $100k of funding from the fresh-from-university founders Jason Yanowitz and Michael Ippolito, and family and friends. Together, they retain 91% after their first fund-raising:
| Blockworks $mn | 2023* | 2022 | 2021 | 2020 |
| Revenue | 25.0 | 25.0 | 12.0 | 2.5 |
| EBITDA | 8.0 | 7.0 | 3.5 | — |
| Margin | 32% | 28% | 29% | — |
| Headcount | 60 | 55 | 17 | — |
It’s a neatly versatile B2B media company which divides its portfolio broadly into three:
Conferences (revenue from sponsorship and delegate fees): Permissionless, in Austin Texas, in September, claims to be the largest gathering of crypto-native participants in the world, 5,500 in 2022 and 3,500 expected this year. Digital Asset Summit is an institutional and regulatory conference for crypto, hosted in New York and London since 2019. In 2024, the eighth event will be in Washington DC, with an expected 2,500 delegates.
Digital (sponsorship and advertising): The daily newsletter claims a readership of hundreds of thousands of crypto participants. Its podcasts are, arguably, the largest network in the sector with eight shows and plans for two further launches in 2023. In Q2, the network scored 5.6mn listens – 22% up on the previous quarter.
Research (subscriptions): A year since its introduction, almost 100 organisations subscribe to the Blockworks platform for research, data and analytics, and governance. It now account for some 10% of the company’s revenue and recently launched the GovHub platform to analyze crypto protocol and legislation proposals.
Co-founder Jason Yanowitz says: “One of our core beliefs is that crypto will become one of the largest asset classes in the world. As this happens, the number of crypto investors will continue to grow exponentially. These investors will demand better news, data, analysis, research, and insights. Through our news, podcasts, newsletter, webinars, and events, “top of funnel” information is plentiful and easily accessible. But deep research and data is still siloed and tough to access. Blockworks Research seeks to fix that.”
But, for all the crypto growth, the scandals and scares are not academic.
They reflect the wild west atmosphere of a market in its first phases of development. That is the opportunity – but also the challenge – for Blockworks.
The imperative must be to spend much of the new investment on the development and acquisition of unique datasets and research that will accelerate subscriptions revenue. Inevitably, the early years of any new market create a frothy demand for ‘news’. But things quickly change and there are now so many reporters across crypto and other media chasing many of the same stories. News can always be the free-access “top of the funnel” content, but the real prize is the development of exclusive insights and data: the ownership of high-value information.
Blockworks, as a business that had so recently been almost 90% dependant on ads and sponsorship, must reverse that dependancy as quickly as possible – in order to create longterm growth in revenue and enterprise value.
The always-learning founders could do worse than examine the acquisition-savvy With Intelligence (in Flashes & Flames this week) for how to stay focused on the journey towards becoming a data company, complete with premium-priced subscriptions. And conferences which complete the virtuous circle of “give and get” databases. These two companies might even one day be competing with each other.
For all the wild adventure of crypto in 2023, Janowitz and Ippolito have developed a conventional – and profitable – B2B media company. So far so good.
At their launch, the founders had said their ambition was to create “the Bloomberg for crypto”. Enough said. But, presumably, the real battle – as crypto becomes increasingly mainstream – will be with Dow Jones, Pearson, Refinitiv and Bloomberg itself. The race is on.
