Venture capital investments vs. ICO


In late February, Crunchbase has estimated that the amount of venture capital investment in blockchain projects this year may surpass the statistics for the year 2017: for the first two months of 2018 in such startups has invested $375 million (compared to $900 million for all of last year). However, the traditional rounds of venture capital investment pales in comparison with investments in ICO.

Crunchbase analyzed data for 14 months (from the beginning of 2017 to February 2018) and tried to figure out how quickly the ICO began to dominate in the financing of the blockchain startups and what is the scope of today’s «financing race». According to the estimates of the edition, during the period of time held a 527 fundraising campaigns, including rounds of venture financing and ICO. The volume of transactions varies considerably, and not in favor of ICO: 32% of deals were signed during the ICO and 68% in the course of venture capital investment. The number of ICO, conducted for the whole of 2017 and in January−February of 2018, almost two times less than the number of investment rounds of venture funding, held blockchain-companies.

But, despite the quantitative loss of the ICO, they are in the lead in terms of the funds raised, attracting much more capital than the average round of traditional venture capital investments. In dollar terms, 78% of the investments accounted for ICO-funding and 22% for the traditional rounds. According to Crunchbase, in the last 14 months, the blockchain startups have raised about $1.3 billion in the course of venture capital investment and a $4.5 billion — in the process of ICO. Even at an early stage of development of the project the volume of ICO usually are not seeding rounds, and the later stages of venture financing, which in traditional investment completed fundraising, raising funds for the development and growth of the business.

The largest ICO 2017 steel Filecoin ($257 million), Tezos ($232 million), Bancor ($152 million), Polkadot ($140 million) and Quoine ($105 million). In 2018, we expect even more impressive results, in particular, the unprecedented scale of ICO Telegram, which, according to anonymous sources, it expects to raise $2 billion and may waive holding a public round of the ICO, as it has the ability to attract the amount claimed under closed tocancel.

However, there are less optimistic figures related to ICO. A recent study conducted by the publication shows that 902 of start-UPS who conducted the ICO in 2017, 142 companies are unable to collect the amount claimed, and 276 of the companies have not implemented the project after raising funds. 113 more startups are in the study to «polypropalene» projects, as their team is no longer active on the social networks or their community is so small that the project has no chance for success. «59% of krautsalat last year or have already failed or on the way to it», — concluded edition.

The SEC and lawyers practicing in the cryptocurrency area, in recent years more and more draw the attention of investors on the risks of ICO. According to one version, the burst of activity the SEC, which sent according to various estimates, from 80 to 200 new agendas ICO-projects, caused by the spread of a certain format of tomenselo — the «simple agreement for future tokens» (SAFT), according to which investors buy the tokens, and the right to receive them after platform ready. The blockchain, which should be based tokens can be never developed.

As noted by counsel, the Washington law firm Harris, Wiltshire & Grannis Jared Marx, the SEC and the U.S. Department of justice today is not the only one who can convict ICO in illegal activities or in violation of promises. The investor can personally file a lawsuit on their own behalf or from groups of individuals — and the conviction of the project will be required to return all investments to investors, even if the funds have already been spent.


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