In an excellent post by Nick Tomaino a Tech investor @RunaCapital and publisher of TheControI – he has cobbled together some serious numbers showing that ICO investment in Blockchain startups has blown by VC investment in the past 12 months.
While venture capitalists have invested some $140 million into Blockchain startups over the past 12 months, ICOs have raised over $331 million in the same time frame. This is a huge reversal of the numbers from 2016 where VC pumped in over a billion into Blockchain and Bitcoin while ICO provided a mere $270 million since 2013, according to Smith and Crown (not including the $150 million raised in The DAO scandal, which was returned to investors).
Tamaino writes more:
There has been a lot of money raised via tokens in the past year ($331.7M+ by my estimation). While blockchains make it easier than ever for entrepreneurs to raise funds (it’s as simple as creating an ETH address and can be done without relying on any bank or any third party service), tokens should not be thought of as a funding mechanism first and there should be a clear purpose for the token (either as a usage token, a work token, or both). There is regulation in the U.S. that prevents the unregulated sale of securities to the public and there are many reasons the leading early stage technology companies today delay IPO, most notably that when you’re publicly traded it’s hard to have a long-term focus. Lack of long-term focus can be paralyzing to technology projects.
Tamaino has created a spreadsheet of ICOs in 2016 and offers a few major takeaways:
There’s an outlier, The DAO, which raised $150M last year and quickly disappeared. While this was an unmitigated failure, the end result of the failure was a successful Ethereum hard fork (the first hard fork for a blockchain at scale). This demonstrates to me that positive things can come away from the failures as well as the successes.
There’s been a lot of greed driving the token momentum in the past 12 months. When you see a project like Gnosis, which last week raised $12.5M at a $300M valuation by launching a Dutch auction and only selling 4% of tokens, you should not dismiss tokens as a whole; this is just one approach. But you should recognize there’s a lot of bad approaches and a lot of greed driving the current momentum.
There are no live products in this group of 29 crowd sales. Raising significant funding before any product is generally a bad idea. If you look at the history of startups, the vast majority of companies that have set expectations high with a lot of funding pre-product have failed. I think there will be a lot of failure in this batch and expect to see better practices emerge for token-based crowd funding in the future.
- MIT Professor Silvio Micali’s Algorand Project Announces Date for First Auction - June 6, 2019
- SEC sues Canadian Messaging Service Kik Selling Unregistered Securities in its $100 million ICO - June 4, 2019
- CrowdEngine Teams Up With Polymath Adding Security Token Issuance to List of Crowdfunding Services - June 3, 2019
- Bitcoin Inc. CEO Morgan Rockcoon Busted – 21 Months in Prison and Fines - June 3, 2019
- Reshaping a Nation’s Logistics Sector: Singaporean Blockchain Company PLMP Cuts Multimillion Dollar Deal With Indonesia - June 3, 2019
- Swisscom TV Opens Blockchain-based Art Gallery - June 3, 2019
- Canadian Messaging Service Kik Burns $5 Million Fighting SEC Over Utility Tokens, Now Raising $5 Million More to Continue Battle - June 3, 2019
- Salesforce Introduces CRM Blockchain Platform For Selected Clients - June 3, 2019
- Block.one Plans to Tackle Pitfalls of Social Media With New Blockchain Community Called “Voice” - June 3, 2019
- CasperLabs and Ethereum on Proof of Stake Protocol at CryptoChicks in Toronto, family ran Hack-A-Thon for blockchain family - June 3, 2019
- World Economic Forum Inaugurates Global Blockchain Council to Address Lack of Well-Defined Rules for Working with Blockchain - May 29, 2019
- India’s First Blockchain Powered VoD Platform ‘myNK’ Launches At Cannes Film Festival - May 27, 2019
- New Zealand’s Cryptopia Exchange Packs It In – Announces Liquidation - May 15, 2019
- Canadian Blockchain Expert Alex Tapscott and NextBlock Global Limited to Pay $1M for Misleading Investors - May 15, 2019
- ObEN Launches AI Newscaster With 3D “Satoshi” Avatar to Deliver Content via PAI News App - May 14, 2019
- Leading Freelance Platform Moonlighting Announces First Blockchain Integration Partner – Teams with HireVibes For EOSIO Solution - May 14, 2019
- Polish-UK Blockchain Company Billon awarded €2 million euro from EU to build DLT Document System - May 14, 2019
- City of Belfast and Colu Team up to Create City Loyalty Token to Boost Local Economy and Environment - May 8, 2019
- Fidelity Investments – to Launch Cryptocurrency Trading Desk Soon – Recent Report Shows Clients Want To Trade Digital Assets - May 8, 2019
- Consensys Accelerates Blockchain Investment Portfolio, Consolidates Investment Arms - May 8, 2019