ICOs alive and crypto startups hunt wealthy buyers

Bitcoin, cryptocurrency & electronic finance

Checking for a pulse in the world of cryptocurrencies? Look no further than the ICO market.

About 70 companies are holding token sales, and another 17 as of last week were planning initial coin offerings, where startups bypass traditional venture capital venues by raising money directly from investors through digital-asset sales, according to data compiled by CoinSchedule.com.

While the market is a fraction of what it was in 2018, it’s still bigger than at the start of 2017, when ICOs first began to take off during the Bitcoin bubble. About $292 million was raised in January, or about one-tenth of a year ago’s $2 billion, according to CoinSchedule.

That companies continue to conduct ICOs could be viewed as surprising. Many tokens have tumbled 90 percent in value since the bubble burst and regulators cracked down on illegal activity. The U.S. Securities and Exchange Commission alone has more than 900 documents on its website relating to ICOs — most of them explaining which offerings should register as securities, or which ones it has stopped. Some 80 percent of ICOs conducted in 2017 were scams, according to token sale adviser Statis Group.

What’s changed now is mostly the venues and to whom the offerings are pitched. While many ICOs used to be launched from the U.S., an increasing number are taking place elsewhere, such as in Switzerland. The Swiss FINMA, for example, will review a startup’s plans prior to an offering and send a letter green-lighting the project.

In the first quarter of 2018, the U.S. hosted 22 completed token sales — about a fifth of the 113 sales globally during the period, according to CoinSchedule’s data prepared for Bloomberg. In the fourth quarter, the U.S. held 12 closed sales, while the rest of the world had 111.

While many North American investors have backed off from token sales, investors in other parts of the world are still buying. In Eastern Europe and parts of Asia, regulations are generally more lax, said Lex Sokolin, global director of fintech strategy at Autonomous Research. Startups there may have fewer ways of accessing capital, and investors — fewer ways to invest.

“The global geographic distribution of crowdfunding investors through social media that put money into new technologies through blockchain-based platforms is out of the Pandora’s box,” Sokolin said.

The latest crop of ICOs may also have more mature projects. Unlike a year ago, many projects raising funds through tokens actually have a product, and can even have millions of existing users.

“These days, people are looking for both vision and signs of good execution,” said Justin Sun, who owns BitTorrent, which just issued its BTT token. The file-sharing service has 100 million monthly users.

Many companies are simply marketing their offerings differently, with projects such as BitTorrent and Polkadot calling them “crowdsales.”

“The ICO model is not going away,” said Jack Platts, a spokesman at Web3 Foundation that will be running a Polkadot sale later this year. “The ability to raise money from anyone globally in a pseudo-anonymous way is still compelling to a lot of projects, and some version of it will be used long into the future.”

That would still suggest investors need to be wary.

“What boggles my mind is that token holder pressure hasn’t prevented entrepreneurs from wanting to avoid this sector,” Sokolin said. “Imagine having thousands of upset traders yell at you on social media all day long.”

Also read:

Dubai royal backs cryptocurrency fund manager Invao

Vertex Ventures invests in global cryptocurrency exchange Binance

Bloomberg

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.