Advanced Blockchain (BWQ) offers unique exposure to a range of blockchain technologies among European-listed companies. The $3bn blockchain industry is growing rapidly and is forecast to reach c $40bn by 2025 (MarketsandMarkets) as blockchain applications are increasingly adopted in multiple industries. Advanced Blockchain focuses on companies and digital assets that use distributed ledger technologies for commercial use It is an early-stage strategic investor and hands-on company builder with a portfolio of cryptocurrency and token investments. Investments are reported at cost and do not reflect some significant successes such as Polkadot, which is currently valued at c 70x the original investment.
The network effect
Advanced Blockchain’s management is relatively experienced, with some notable successes in an emerging industry, and is well placed to deliver on a strategy built on equity investments, token investments, project incubation within the token-based economy enabling portfolio companies to grow blockchain ecosystems. The focus will continue to be on decentralised finance (DeFi) projects as well as essential infrastructure projects enabling cross chain interoperability. Management is complemented by c 150 sub-contracted developers as the company seeks first-mover advantage in a rapidly changing industry.
Industrial disruption
Key investment themes include building Web 3.0 infrastructure, DeFi (DEFI)and tackling persistent blockchain issues such as interoperability. For example, portfolio company Peaq has developed an interoperability platform being used by a large car manufacturer for its electric vehicle charging platform and by NTT to help secure its data centre. Incubated company Composable Finance addresses interoperability issues in the DeFi area, providing seamless movement between layers one and two of the Ethereum network. Composable recently secured a Polkadot parachain and a valuation uplift.
Valuation: 16x market capitalisation to EBITDA
Consensus forecasts are not yet available, there is limited financial disclosure and a lack of direct listed peers. Advanced Blockchain became profitable in H121 and is trading at 16x its market capitalisation to 2021 EBITDA, which is calculated by annualising the reported H1 EBITDA of €1.5m. We are unable to calculate EV/EBITDA as the company has not reported net cash.
Historical financials
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Business description
Advanced Blockchain is a Berlin-based, publicly listed, blockchain-focused investor and incubator with a portfolio of equity stakes, cryptocurrencies and tokens.
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