Funding of nearly $ 1.3 billion has boosted start-ups this year through Initial Coin Offering (ICO), a new block-based fundraiser that resembles a classic IPO. This is the data of Autonomous, quoted by the Financial Times.
These days, the question arises whether ICO is part of an inflated bubble in the world of crypto or an innovative new way for companies active in the field of block technology to find financial support.
What exactly is ICO?
This is an approach often used by technology startups. The process resembles the classic primary public offering of shares, except that this does not happen on a regulated market, but crypto coins are used instead of shares.
Thus, a start-up company announces its ICO, after which investors can buy the digital assets released by the company, and often these crypto coins represent digital "tokens" by which the investor can use the service developed by the ICO launcher.
Unlike IPO, all this is happening in a market that is not subject to any regulation, at least for now. According to some analysts, the process also resembles a blockade crawling, similar to projects launched by platforms like Kickstarter, Indiegogo and so on.
Perhaps the biggest advantage of ICO is that money is collected literally for minutes - usually, the whole process lasts about 30 minutes. Investors, however, receive nothing more than the digital asset - neither a percentage of the company nor the right to vote in decision-making.
According to the Autonomous report, it is precisely the lack of regulation that provokes some companies to opt for a form of financing through ICO.
"Imagine a new casino is being opened that, to finance itself, sells its own plastic chips before opening, waiting for consumers to use these chips, creating an economic value," writes Autonomous.
"Buyers start trading on these chips, the price is based on the expected value of the casino, how much it is going to be, and whether other chip owners are trading them," the report said.
All of this, however, creates anxiety, as many companies resort to the collection of millions of dollars via ICO, without really having a business plan or a sophisticated strategy. The real enthusiasm around the entire block ecosystem creates optimistic pre requisites for investors' moods, which are often not based on any rigid regulation or business idea.
According to the survey, the funds raised through ICO report exceptionally high growth over previous years. For comparison, in 2014, only $ 26 million was collected through ICO. By 2015, funds even declined to a total of $ 14 million.
Last year, however, they jumped to $ 222 million just to hit a record $ 1.3 billion in the first half of this year 2017.
More than half of this year's funds are raised in June and July, according to analysts, and this is dictated by the record-breaking prices of Bitcoin and Ethereum.
Still, ICO can not be compared with classic IPO or crowdfunding techniques. For comparison, in the year 2015, the drought-priced platforms used to raise $ 34 billion, while in the past 2016 the funds jumped to $ 127 billion.
The two startups, which can now boast of record investments raised through ICO, are Tezos and EOS.IO. Each of the two startup companies has raised $ 200 million through the new approach.
Finally, it should be noted that history remembers a number of failures of emerging technology companies. A survey shows that 86% of new technology companies fail 10 years after their founding. This means that 86% of companies that could raise millions of dollars via ICO for a few minutes will probably fail.
But what remains for those who will succeed? They will join successful examples such as Amazon, Facebook, Google and so on.
Etherium => Ethereum?
Thanks typo error
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Any idea what the next HOT ICO will be? anybody seen any advertising on billboards/adverts for ICO's that looking interesting. Would love to know. Thanks....
District0x looks pretty good. It's a dapp that allows users to create decentralized marketplaces, and unlike most ICOs, they already have a number of working products.
I especially think it will be a good deal if they stay under the soft cap - as that means each investor will receive more tokens for their ICO contributions.
You can check out the project here: https://district0x.io/
Thats very good - Ill have a look at that site :) I already like the look of their front page. Thanks alot.
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