Study: Token Sales Financing Still Twice as High as Traditional Venture Capital

Research report from data research firm teQatlas on August 1st shows that ICOs raised $2.095 billion in the first half of 2019, while blockchain projects raised only $1.248 billion through traditional venture capital (VC).

The research report by TeQatlas covers data on approximately 2,500 blockchain companies and 1,800 investors. These companies raise funds through traditional and alternative financing instruments, including venture capital, Initial Coin Offerings (ICOs), and Initial Exchange Offerings (IEOs).

Token Offerings Reached a Peak of $15.2 Billion in 2018
According to the findings, TeQatlas suggests that investors still view blockchain projects as high-profit investments. Investments from traditional venture capital funds in the sector have been steadily rising over the past four and a half years, totaling around $9.2 billion.

However, this total funding pales in comparison to the massive funds raised through ICOs, which reached $15 billion in 2018 alone. Although this figure dropped to slightly above $2 billion in the first half of 2019, it is still almost twice the $1.25 billion raised through traditional venture capital during the same period.

In terms of fundraising rounds, blockchain-related projects saw a total of 476 rounds in 2017, 910 rounds in 2018, and a decrease to 268 rounds in the first half of 2019. The total number of traditional financing rounds in 2018 was almost equivalent to the number of ICO financing rounds, indicating a strong interest in blockchain projects from both retail and institutional investors in 2018.

A report indicates that while traditional financing totals have been close to token offerings since 2018, the total raised through ICOs, IEOs, and other token sales still exceeds traditional venture capital by nearly 26%.

Regulatory Uncertainty
As of the first half of 2019, 56% of fundraising was achieved through ICOs and IEOs. However, the total amount of funds raised is showing a downward trend, which TeQatlas attributes to investors' cautious stance amid regulatory uncertainty.

Joe DiPasquale, CEO of venture capital firm BitBull Capital, commented on the decline of ICOs:

ICOs were largely driven by greed, with speculators rushing to find the next Ethereum. Without a solid foundation, the bubble was bound to burst, and it's unlikely we'll return to the ICO frenzy of the past. We may see more standardized crowdfunding methods, such as security token offerings.

Further Reading

• There are over 5,000 cryptocurrency ATMs worldwide
• The New Jersey Securities Exchange Commission halts two ICO projects, citing fraud

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