By 2019, the ICO market was not as prosperous as in the previous year, having weathered the crypto market's harsh winter in 2018, with overall cryptocurrency prices plummeting by 80%. The market is gradually shifting towards a more rational investment environment.
In July 2019, Sony Financial Ventures joined a $14.5 million financing round for the Bitcoin bank Bitwala. This figure may not have made many headlines in 2017 or 2018, as crypto startups back then could raise hundreds of millions through ICOs.
According to data from ICO analysis company ICOdata.io, over $340 million was raised from 83 crypto fundraising events in 2019, as shown in the chart below. Just in June 2018, token sales alone increased by over $900 million. Throughout the year, over $7.8 billion was raised from 1,253 projects. However, as of now, only the ICO sales in March and May 2019 have surpassed $100 million.
We can see that the ICO boom has significantly slowed down, with fundraising numbers in 2019 far from the huge amounts projects earned two years ago. Investors have also realized that most tokens issued during the ICO frenzy of the past two years have lost their initial value.
Joe DiPasquale, CEO of crypto and blockchain hedge fund company BitBull Capital, shared his thoughts:
"The ICO market was largely driven by greed, as speculators raced to find the next ETH. Unfortunately, this environment was rife with scams, and people quickly realized that the hundreds of thousands or even millions they raised included vague promises and plagiarized whitepapers. Without a solid foundation, a bubble was bound to burst, and we are unlikely to return to the ICO hype of 2017 and 2018. Instead, we may see more standardized crowdfunding methods."
Subsequently, the overall crypto market has undergone a transformation, with increased regulatory scrutiny across the industry. Crypto supporters are aiming to make cryptocurrencies a more mature asset class.
Current Crypto Investment Environment
The market has shifted towards other ways of fundraising for crypto startups. In June, according to a report, digital asset cybersecurity startup Fireblocks raised approximately $16 million in a Series A funding round from VCs.
While some companies accumulated stable funding through VCs during the earlier ICO craze, such as Circle and Coinbase, which received millions from venture capitalists at different times, Joe DiPasquale speculates:
"Venture capitalists and experienced investors in the crypto space are not attracted by hype. They seek solid teams with good ideas and take a milestone-based investment approach. Even in private rounds, they enter early to ensure maximum return on investment and low risk."
In 2018, venture capital firms invested over $2.85 billion in crypto and blockchain projects. This amount pales in comparison to the total equity investment outlay for enterprises in 2018, which surpassed $350 billion, according to data from Crunchbase. Despite being relatively small, venture capital has not lost interest in investing in cryptocurrencies, especially as the demand for projects, particularly in products, teams, economic models, and adherence to roadmaps, has significantly increased.
As reported by Cointelegraph, crypto bank BlockFi has secured around $18 million in Series A funding led by Peter Thiel's Valar Ventures.
This rational investment strategy sharply contrasts with the high-yield investment product atmosphere of the ICO era. With only whitepapers and vague business plans, most failed to achieve their lofty initial goals. The market is gradually moving towards a more stable and rational environment. Let's maintain confidence in cryptocurrencies and see where it goes!
Further Reading
- New Jersey Securities Exchange terminates two ICO projects, citing fraud
- USD Coin becomes the first stablecoin to issue $1 billion within a year
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