The first quarter of 2022 has come to a close and we are proud to present this investor update to our shareholders. At Advanced Blockchain, we scaled tremendously since our previous investor letter and EOY shareholder letter and continue to position ourselves for accelerated growth to ultimately deliver long-term value to our investors. In the last year, Advanced Blockchain has become a driving force and thought leader in the cross-chain and decentralized finance (DeFi) space. We continue to leverage our diverse team with seasoned expertise and relentless enthusiasm to diversify and dive deeper into building, investing, and researching to shape the next generation of blockchain technology. We provide real-world value by driving forward the overall adoption of blockchain technology. Our team has expanded exponentially to match our work and ambition. Currently, the Advanced Blockchain team consists of 200 professionals globally, with expertise in software development, research, finance, operations, marketing, and business development.
Update on Consolidated Financial Statements
According to unaudited figures, Advanced Blockchain was able to close the year 2021 as expected with a significantly improved consolidated net profit of more than 5 million EUR.
According to the unaudited consolidated financial statements prepared by the Management Board, consolidated sales of 17,861 thousand EUR (previous year: 1,547 thousand EUR) were generated in the 2021 financial year, with consolidated net income amounting to 5,317 thousand EUR (previous year: 9 thousand EUR). The reported consolidated equity increased to 12,047 thousand EUR (previous year: 2,121 thousand EUR).
Increased Investor Relations and Communication
As we continue to scale we are continuously working to improve our external communication to efficiently showcase all of the amazing progress we are making as well as the value that is being generated. As such we are proud to announce that we are engaging with GBC AG as a research partner as showcased by their latest research report of Advanced Blockchain. In this report GBC AG audited and researched our value and progress and set a stock target price of 23,32 EUR while estimating that our enterprise value, inclusive of our diverse portfolio, sits around 88M EUR. These efforts are aimed at increasing the quality and consistency of our investor relations and communication
Advanced Blockchain: Our Vision and Business Fundamentals
Advanced Blockchain as an Investor, Venture Builder, and Researcher is making tremendous strides in the development, investment, and education of and for a blockchain-enabled future. We believe the Web3 space requires bold innovations that afford users multi-variant solutions that ultimately help propel the industry forward and we will continue to bridge the gap from Web2 to Web3. This is why we are expanding at an incredible pace and are simultaneously broadening the focus of our efforts. Our efforts are geared towards allocating research, development, and investment resources towards opportunities that generate value across blockchain. In this way, we embrace foundational technologies in Web3 with a specialist focus on DeFi and cross-chain technologies. Since 2017, Advanced Blockchain has been leading profitable and successful investments and alongside the introduction of our in-house research and incubations team, we are fully equipped to ensure that all of our future endeavors are value-driven and diversified while further growing our sustainable revenue stream.
We recently released a consolidation of the Advanced Blockchain vision, which reconciled the evolution of our work which has generated award-winning results. We encourage our shareholders to read it in combination with this investor update as it highlights our vision, outlines our core business fundamentals, and showcases where our focus is and will be in the coming months.
To summarise, we believe in three fundamental values to lead the next generation of industry leaders. These values have been translated into the departmental operations of our work.
1] Smart Capital Investments: our strategic capital allocation and portfolio support efforts
AB.Capital is our investment wing and is uniquely positioned to provide smart capital to entrepreneurs at every stage of the business life cycle. Our portfolio companies can take full advantage of the resources provided by AB Labs and AB Research to accelerate their growth, refine their innovation, and scale their operations. We give our shareholders the ability to participate early in attractive and exclusive Web3 opportunities, providing long-term value to our global investors, partners, and communities.
2] Proactive Venture Building and Incubation: our integrated approach to venture building and scaling
AB.Labs is a hub for like-minded founders seeking to incubate their ideas through our venture-building division. We empower entrepreneurs with the necessary resources to build and scale their ideas whilst identifying further opportunities to integrate their developments with other products and services within our holistic ecosystem. We build real problem-solving businesses in-house grounded by well-researched and tested ideas. Our Labs and Research teams, therefore, work in tandem to develop valuable and necessary solutions that are equipped with the talent, resources, and tools to scale the business efficiently and successfully.
3] Holistic Research and Education: our holistic research efforts and education programs
AB Research is an integral part of enabling the future of Web3 by analyzing, theorizing, and actualizing solutions to the most probing questions in the industry. Our research division acts as an in-house think tank to identify problems in the industry and create innovative solutions. Additionally, it supports our portfolio companies by understanding and deploying their expertise to solve some of their most in-depth problems.
Advanced Blockchain: How we generate value
The overall growth of the blockchain market can not be overlooked. Businesses are thriving and building products and solutions that are being adopted and deployed across a variety of business and lifestyle sectors. As we are still in the early stages of this fast-growing industry, it marks an incredible opportunity to participate in lucrative investment opportunities which can only be compared to the likes of the internet boom.
These opportunities, though highly attractive, can also be risky if not well-vetted and understood or simply hard to participate in without proper awareness, value positioning, and technical knowledge. Additionally, many of the high-growth potential ventures have begun to keep their early rounds exclusive to value-add partners and investors such as Advanced Blockchain. Since Advanced Blockchain provides more than just capital, we are able to access high potential deal flow early as we provide our portfolio companies with immense value through our well-diversified team of over 200. This is where Advanced Blockchain truly contextualizes its value as an investor and builder in the space. Our ability to participate in these successful and scalable projects at a very early stage brings unrivaled value to investors of the traditional market. Advanced Blockchain provides investors the ability to enter the blockchain market in a safe, secure, and trusted manner. Thus, we alleviate the pain points of investing in this cutting-edge space while allowing investors to profit from the growth and success of the industry.
Each of our business ventures and verticals is fundamentally important to the value that we generate. Our operations are clearly synergistic in nature but really what we have created is a unique environment that enables our business to experience symbiotic growth. We achieve this symbiotic growth through the compounding cycle of the different verticals we have created.
As an example AB.Research is the birthplace of many questions and ideas that are generated and developed into businesses through AB.Labs. These businesses are equipped with all of the necessary resources from development to business operations and marketing. As these companies begin to scale they are introduced to AB.Capital where they have the opportunity to seek additional funding or utilize the wealth of resources and network to be guided in the fundraising efforts. In this way, we provide value to all ecosystem participants, whether it's an idea that was birthed through our full cycle or one that begins to utilize our resources at an already established level. We generate real value through these different verticals in distinct ways:
AB.Capital enables us to invest in protocols through their private and early-stage funding rounds. Through our Capital arm, we have built a solid portfolio of Tokens that are generating value both realized and unrealized. We have participated in the rounds of several promising companies and our portfolio of investments now includes over 33 different Token holdings. These portfolio companies are scaling and we continue to back their growth efforts through our value proposition of support and resourcing beyond capital through our Labs and Research arms. Our support includes developer support, marketing, trend and solution ideation as well as business development.
AB.Labs generates additional value, as Advanced Blockchain enters Token positions in the companies that we incubate, build and run, or spin out into successful autonomous projects. We also provide a variety of services including but not limited to; incubation, software development, scaling, marketing, and business development services to companies that are seeking expertise or support in specific aspects of their project. These additional services provide us with recurring revenue through contract agreements as well as in some cases additional Token allocations for the services rendered. As one of the largest in-house teams of builders and developers in the blockchain space, we are best positioned to support and nurture the most promising ideas and projects, as has been evidenced with Composable Finance and Peaq. Thus AB labs has become an attractive space for founders to pioneer both their teams and projects. We are therefore positioned alongside the market leaders in the blockchain space such as Consensys which is valued at over $7 Billion dollars and Delphi Digital valued at over $90 Million dollars.
AB. Research generates value in all aspects of our business proposition. Our research division is utilized by our incubations, investment portfolio companies, and our in-house company building structure to ensure we are leading meaningful and value-add innovation. Research contracts for specific projects are also being utilized and result in additional streams of revenue for Advanced Blockchain. The research team helps us identify incoming trends for investments, to ensure our capital is invested in not only smart but also the most profitable outcomes.
Thus, all of our departments have their respective roles that are generating scalable yet sustainable value for Advanced Blockchain. Collectively, our team provides unique and unparalleled value to the generation of Web3 innovation.
Whilst the above are segregated in terms of operation, the intersections of these departments enable powerful results and insights. Where research identifies what is required and what will be upcoming trends in the DeFi and Blockchain industry, our incubations team works in tandem to ensure the birthing of any new ventures is both sound in terms of data, science, and development. Investments intrinsically become smarter through the generated recommendations as we can predict through the seasoned expertise of long-standing blockchain investors and alongside mathematical analysis. Thus, we provide the best yield opportunities and return for our company and our shareholders at large.
Advanced Blockchain: Portfolio Highlights & Updates
Since 2017, Advanced Blockchain has established itself as a leading investor and builder in the blockchain space. We made early investments to build a portfolio that has already begun to provide significant returns. For instance, we participated in the Polkadot presale which has since grown into one of the most successful blockchains with a current market value of around 19 billion dollars. Furthermore, we participated in the pre-seed rounds of Energy Web Token and Coti and continue to utilize our ability to access early deal flow to enter favorable investment positions. Simon Telian, CIO at Advanced Blockchain AG, commented,
Advanced Blockchain is profitable across its different business verticals. Our portfolio of investments is growing and many of our investments have increased significantly in value. Additionally, the companies we are building, running, and incubating are continuing to grow into profitable entities as we have brought many to scale and generating value through their core business operations, fundraises, or growth initiatives. Below are some of our portfolio companies which are already on track to be a great success.
Composable Finance (Incubation & Token Investment)
Composable Finance had a tremendous year and the AB team had an active role in having launched, collaborated, and supported several projects and efforts that are integrated into the Composable Ecosystem. Composable was one of AB’s earliest and largest investments and has grown to be one of the most significant holdings as showcased by the increase in value during their latest round. In addition to the incredible accomplishments that are highlighted in the year in review, Composable has started the year off strong by securing a Polkadot Parachain slot by raising over $160M USD at auction and raising over $32M in their Series A financing round. Previously incubated by ABAG Labs, Composable benefits from our expertise and resources to pioneer ‘the face of DeFi’s Future’. The team at Composable has pioneered its own Composable Labs to build and attract projects to deploy natively on its Picasso network set to launch this year.
Peaq and its platform continue to position themselves as a lead innovator and enabler in the Web3-based Economy-of-Things. Milestones have been outlined and are under constant development and deployment to drive forward in this vision such as machine self-sovereign identities utilizing NFTs. Advanced Blockchain holds equity in Peaq and will also hold Peaq tokens in the future.
Element Finance (Token Investment)
Element has grown its team immensely since the funding round. Recently, they announced the beginning of the Element DAO & Council protocol also leading to the launch of the ELFI governance token. These are the first steps towards the evolvement of the DAO and we are very proud to delegate our ELFI stake to Advanced Blockchain’s Head of Strategy, Robin Davids, as he is joining the council and thus further supporting the growth of Element. Advanced Blockchain has also advised and produced a thought-leadership and marketing plan in tandem with the Element founders and executive team.
Warp Finance (Incubation)
Warp Finance has continued its efforts in developing and deploying solutions for unlocking capital efficiency in DeFi. Most notably they are preparing for the launch of their V2 update which will bring about novel use-cases in crypto lending.
Neon Labs (Token Investment)
Neon Labs made great progress with its development so far. They have deployed their alpha on the Solana devnet in the past days. Extensive testing and monitoring will follow and we expect to see the first movers of the Neon ecosystem actively deploy their dApps to kickstart the growth of EVM compatible applications scaled by Solana.
Obol: (Token Investment)
Obol, with the migration to ETH2 imminent, we are extremely excited about the progress the team has made this far. The product they are building is incredibly technically complex, however, they are well on their way to testnet by Q2 2022. We are also impressed with the team’s ability to garner support from the most important actors in the Ethereum community, including Ethereum Foundation, ConsenSys, and Ethereal Ventures.
Polymer Labs: (Token Investment)
Polymer is a project with which we have a particular focus. As one of their largest investors and supporters, we successfully facilitated an in-depth partnership between AB portfolio company Composable Finance and the team at Polymer. The team has begun to deliver robust interoperability infrastructure leveraging Cosmos’ IBC standard and is on the cusp of completing their series-A round, which will result in significant ROI for Advanced Blockchain.
NEAR protocol: (Token Investment)
Most notably, Near was able to raise their second 9-figure investment round this year, announcing their new raise of $350M. Their ecosystem is growing very quickly and with it, we are seeing a very favorable increase in the token price. Our cost average during the $150M raise was around $5.50 and the token is now trading at around $16.00.
Talisman: (Token Investment)
Since we first made our investment in Talisman in the past August, we have seen the team deliver on their technical roadmap and now they have one of the most comprehensive multi-chain wallets in the Polkadot ecosystem. They have built partnerships with all the right ecosystem support groups and we are very excited about their long-term trajectory.
Bribe Protocol (Incubation)
Bribe Protocol is in the early process of revolutionizing dGov as they continue to develop their product and important partnerships. Furthermore, the Bribe protocol can be utilized by our portfolio companies for important governance integrations and functionalities.
Instrumental Finance (Incubation)
Instrumental Finance is preparing to launch its vaults to offer new cross-chain strategies. Notably, we have conducted joint research to support their efforts in further development and are excited to see the research be transformed into problem-solving technology that adds value to the broader DeFi ecosystem.
FinPro: (Incubation & full acquisition)
FinPro develops concepts and realizations for blockchain-based representation, management, and trading of digital assets, securities, and other abstract assets such as NFTs, with a focus on tokenization. The company has been able to generate over 4 million in revenue, secure partnerships with world-class media companies for NFTs, and develop a successful real estate crowdfunding proof of concept.
Tracebloc (Equity Investment):
Tracebloc has been progressing in its core business operations and continues the innovative development of their solution. They have secured exciting early traction through onboarding of their first clients and are communicating with further potential clients that have shown increased interest in the Tracebloc solution.
Lendflo (Equity Investment & Successful Exit):
Lendflo, an Advanced Blockchain investment and incubation, was acquired in August of 2020 and resulted in a 6-figure return for AB. LendFlo was taken over in a trade sale by ABHH Group. AB helped develop, scale, and position LendFlo for the exit.
Expansion of the executive and leadership team
As the Advanced Blockchain global team has continued to expand, our internal structure has seen some very valuable executive and leadership additions. We want to dedicate a section of the investor letter to highlight the exemplary work that these individuals have accomplished with their respective teams:
Chief Strategy Officer
Robin as Chief Strategy Officer leads on our strategic and sustainable positioning for all of our verticals. Robin’s speciality lies in analyzing and optimizing the game-theoretic components for aspiring decentralized protocols. Robin acquired his first $ETH in 2015 before becoming completely enthralled with the industry and entering the space full-time while still at University. He went on to co-found a consulting firm focusing on strategy, network design, and content creation. Robin has been instrumental in the token incentive design for several projects including Ferrum Network, Tellor, Warp, and Ultra. Robin is actively involved in the open-source movement, dedicating time to helping crypto advocates and entrepreneurs as a KERNEL fellow at Gitcoin. Robin represents ABAG in a variety of portfolio companies, most recently joining the governance steering committee at Element Finance (which recently closed its Series A round valued at $320 million).
Head of Ventures
Prior to joining the ABAG leadership team, Richard previously built and led the crypto and blockchain investment banking team at Weild & Co, a FINRA-registered broker-dealer based in New York. Richard has proven himself to be an incredible visionary for the expansion and execution of our ventures and AB. Capital division by driving our deployment of capital and portfolio management resources as aligned with our smart-capital investment strategy. His background as a co-founder, and specialist in digital asset management positions Richard to make tactful and insightful decisions to diversify and strengthen the ABAG portfolio further.
Head of Platform
Derek Hansen manages advanced blockchain on balance sheet assets and advises closely on our product strategy and development function. Derek has been a computer science advocate from a very early age, coding his first program at just 9 years old. He started his career as a software engineer for the likes of Thomson Reuters and MITRE before joining an enterprise IT scale-up – NimbleUser – in 2012. At NimbleUser, Derek joined as a junior engineer but quickly rose to director of engineering delivering financial products to some of the largest associations in the world. He then went on to serve as the Director of Product at the edtech company SSS by NAIS. It was during this period (2016-17) Derek reconciled his ambitions and interests with the blockchain space and found ways for its novel application. SSS by NAIS was later acquired by a private equity firm, in which Derek was heavily involved in the technical due diligence. He then went full-time into crypto in 2018 as the Chief Research Officer at Hu-manity.co, a start-up focused on self-sovereignty and sharing of health data. Subsequently, Derek developed a trading practice for cryptocurrency and digital assets investments and trading - scaling the business to $35m assets under management with a 5 person team.
Head of Research
Jesper is responsible for the incredible innovative ideas, testing, and proof-of-concepts that are birthed in our research division. Jesper leads his team to play an active role in the broader blockchain landscape to discover new themes, trends, and problems where we as a company can build, run, and support solutions to create value. The research team plays a vital role in all aspects of our business model. Jesper oversees the team of researchers and economists that provide deep insight both to incubations and invested projects. With his reach in academia as an established thinker and writer, Jesper has been able to pioneer partnerships with leading specialists in a variety of fields including a promising solution led in partnership with a professor of applied physics, and presenting award-winning research produced in-house at a variety of global summits. Jesper is a PhD holder in applied physics from Cornell, and previously worked at GE Research, and later the startup Flatiron health.
Head of Incubations
As Head of Incubations, Henry leads our projects consolidating across all of our in-house resources, and guides project leads to create scalable and profitable solutions ready for investment and market launches. Coming from a background in Venture capital, previously working at TA Associates and Thrive Capital, Henry has a deep understanding of working with founders and assisting them with scaling up their businesses. Prior to this henry spent 3 years at McKinsey in the technology space assisting companies with scaling and refining their operational practices. Henry holds a BA from Yale University.
Head of Marketing
Zain drives the voice of the company and allows all of the incredible work that our team is doing to shine through the different offline and online platforms. Through Zain’s oversight of the marketing department, Advanced Blockchain is not only able to communicate the innovative progress but also educate communities, partners, investors, and newcomers to the fundamental knowledge base of cross-chain technology, blockchain, and Web3. Much like research, the marketing department is involved in all aspects of the Advanced Blockchain business model and Zain resources the talent to cover a variety of needs of not only the core AB business but also the needs of our portfolio companies, providing counsel and strategy for leads and the executive office. Zain has advised a plethora of projects and developed successful growth and marketing campaigns within the start-up space and for web3 solutions. Zain has a BA in Development Economics (SOAS, University of London) and an MPhil from the University of Cambridge.
Head of People and Operations
Nanni has over 12 years of experience in building teams and resourcing talent for a variety of leading companies including L’Oreal and the RSK Platform & RIF hiring talent for the smart contract platform. Nanni since joining has overseen the rapid expansion of the talent across the board and led on hiring for incubations that are scaling. Nanni leads on team development and engagement, company culture and ensures that a seamless resourcing strategy is in tandem with our ambitious growth plans as a company.
Advanced Blockchain: Scale Segment Uplisting
Advanced Blockchain AG has officially entered the growth segment of the German stock exchange, known as Scale. This segment of the German stock exchange is exclusive to fast-growing companies. The uplisting is a testament to the hard work and dedication of all of our team members. This uplisting is a testament to Advanced Blockchains' position as a: trusted partner, regulated entity, and the strength of our history of over 5 years in the blockchain space.
For more information on the scale uplisting please check out this official announcement: https://www.boerse-frankfurt.de/news/advanced-blockchain-ag-neu-in-scale
Increased Event Participation
We are also happy to announce that we are increasing our presence at global technology and blockchain events to continue growing our impact, expertise, and network of partners, community members, investors, developers and collaborators. For example, our team recently attended ETH Amsterdam, ETH Denver, and several online events such as the 3rd Asia Service Sciences and Software Engineering Conference where our Head of Research won the award for his research presentation. Our team will also be attending the Münchner Kapitalmarkt Konferenz (MKK) in early May of 2022.
The Advanced Blockchain Market Strategy
At Advanced Blockchain, we take a strategic stand as an investor and venture builder. We make sure to secure success and progress in every possible market outcome. We understand very clearly that the blockchain market involves a lot of risks but are fundamentally positive about the long-term success of the application and technology as a whole. Though positive on the long-term outlook of the market, we are prepared for every market outcome and always keep the risk and volatility of the market in consideration.
Advanced Blockchain takes a “market-proof” approach to business and investment operations. In the case of unfavourable market conditions, we are positioned to maintain sustainable and competitive growth through revenue and value-generating avenues that are less affected by market conditions. These include the services that our teams at Labs and Research provide, on a contract basis, and result in recurring and stable revenue streams. More importantly, we are in a unique position to participate in the success of the market as our AB Capital arm sources and invests in the most promising projects that benefit from an upswing in the market. Additionally, our incubated projects are further amplified and galvanised in favourable market conditions, such that our overall token and equity portfolio will provide an immense return on our investment. Notably, we hold token positions that provide favourable APY during more stable market conditions, thus we are positioned with a “market-proof” business model.
Blockchain with a specialist focus on DeFi and cross-chain technologies
We are continuing our efforts in the DeFi and cross-chain landscapes as we continue to see high growth and positive market outcomes as more builders and users take advantage of novel solutions that enhance even the capabilities of traditional financial products and services. We also understand that there is a long way to go before this sector reaches an adoption-ready state for the vast majority of the world. As such, we are continuing to back this vision but additionally have started to repurpose our learnings from the DeFi space and started applying them to other sectors that could greatly benefit from interoperable blockchain technology.
As such, Advanced Blockchain envisions 2022 to be a year where we continue our success and network effect that was fostered through our DeFi and cross-chain initiatives across a multitude of different blockchain verticals. Thus, we are continuously conducting research across different themes and use-cases to clearly define, develop, and deploy strategies. Our strategies are aimed at supporting and promoting the growth and adoption of the ecosystem through education, investments, and incubation of the most promising protocols and technologies.
Further information on Advanced Blockchain and our other projects and investments can be found at https://www.advancedblockchain.com/.