Venture capital finds that its lunches are being eaten
The news is bad for those who hoped that the clocks could turn back, that ICOs might go away. There are now strong signals that not only are blockchain and cryptocurrencies here to stay but token offerings and ICOs too, as their novel merits are increasingly appreciated in the mainstream.
PwC recently published its third strategic report on ICOs and found: “Since our last report, Dec 2017, ICOs have gained further momentum and are emerging as a workable, alternative form of crowdfunding”. Furthermore, PwC found that they continue to increase, to the extent that in the first five months of 2018 they raised almost twice as much ($13.7bn) as in all previous years combined ($7.3bn).
In Europe “Switzerland stands out as the ICO capital” and it notes that the UK has “gained terrain in terms of volume and numbers” – although not to the extent of the overall increase.
If we want to lead the world in blockchain and financial services we’ve a long way to go and an awful lot to do with the Cayman and British Virgin Islands followed by Singapore and even the USA SEC-bound ahead of us.
It notes that “around a third of all ICO projects close successfully” broadly in line with other forms of crowdfunding but that “many projects are delayed and lose momentum during ICO preparation” due to legal, team or other struggles.
Interestingly it says that the majority of top funded ICOs are “on track” with a product further being developed and “only a few” have no product yet.
Perhaps most surprising though is the comparisons made between “pure ICO funding” versus venture capital, and also the hybrid of these two.
This shows clear advantages for the hybrid with validation and “first customers” from the crowd added to a mix including business angels, the crypto community and tech-savvy investors.
VCs “have realised that a big part of their lunch has been eaten and that they need to catch up. They still rightly treat ICOs as the venture investments that these opportunities are – irrespective of funding mechanism – and typically aim to get in pre-pre-ICO and with a mixture of equity and tokens. A great way of marrying the best of both worlds is to combine smart VC money input with the wider investor base and publicity of an ICO, commented one of the report’s authors Dr Guenther Dobrauz-Saldapenna.
So it’s new, it’s here to stay and this is just the start – for more, look out for my forthcoming interview with the authors or download the report, linked via ICOrad.io.
Please Tweet/Telegram questions to @BarryEJames or listen at ICOrad.io.
