Cash is drying up for bitcoin and blockchain startups amid a broader decline in FinTech funding, according to new research from KPMG and CB Insights.

The report, published today, shows that for the third straight quarter, VC investment in startups using distributed ledgers declined.

While enthusiasm for the technology remains, the report said that companies shouldn’t expect additional funds until countless proofs-of-concept emerge on the market.

The report reads:

“The ability to move blockchain from proof-of-concept to adoption and production has been minimal. While the market is still giving blockchain companies plenty of room to prove themselves, investors are also becoming more concerned about results.”

In the third quarter of 2016, a total of $87m was invested in bitcoin and blockchain startups, according to the report, a decline from $119m invested in Q2 and $153m in Q1.

But the other key takeaway from the “Pulse of Fintech” report is that there was also a global decline in FinTech funding, while total deal activity fell.

“While we continue to see significant investment into fintech companies globally, the euphoria for mega-deals that we saw into the latter half of 2015 has waned,” Anand Sanwal, CEO of CB Insights, said in a statement.

Overall, blockchain is listed along with roboadvisors and AI as FinTech tools that will continue to “to attract more attention over the next few quarters”, though this could depend on the success of PoCs.

Around the world

But while venture capital for blockchain innovation is on the decline, different regions tell different stories.

The US and Denmark are listed as the top countries participating in blockchain investment, while a particularly slow quarter for Europe is blamed in part on uncertainly following Britain’s decision to leave the European Union.

An “uptick” in Asian investment in blockchain and financial technology more generally speaking is credited with the region’s interest in its potential to help it expand beyond its traditional borders.

As such, KPMG China’s fintech and innovation partner, Raymond Chang said investors remain interested, just not in massive rounds.

“VC investors are putting a lot of money into small blockchain technology companies in Asia,” Chang said in the report. “Some very new companies are already into their second or third round of funding.”

Plant in the mud image via Shutterstock

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