Average value of an ICO rises to $10m, throws VC funding in a dilemma

Photo credit: BTC Keychain.

ICOs – initial coin offerings – raised over US$2 billion in the last two quarters. The number of ICOs in that period was 212, shows data compiled from TokenData and CoinSchedule.

The average value of an ICO works out to nearly US$10 million. That’s ten times more than the average value of angel and seed funding in the same period, according to CB Insights data.

ICOs really took off in the second and third quarters of this year. In the previous two quarters, there were just 18 ICOs and they raised US$77 million – for an average value of a little over US$4 million.

Sources: CB Insights, CoinSchedule, TokenData.

But now, with ICOs averaging a cool US$10 million, blockchain startups appear to be fast losing interest in VC funding, going by the drop in early stage VC funding and rise of ICO funding. Early stage VC funding in blockchain startups picked up in the second quarter of 2017, but dropped sharply to US$73 million in the last quarter even as ICO funding shot up to US$1.3 billion.

Source: CB Insights.

Clearly, in these circumstances, a blockchain startup would rather go for an ICO than traditional angel, seed, or series A funding. ICO investors have shown an insatiable appetite for cryptocurrencies this year, disregarding warnings of a bubble from more traditional investors, banks, and governments.

The going rate of the leading cryptocurrency bitcoin touched US$6,000 at the end of last week, a 600 percent rise from the start of the year when it was less than US$1,000. The price of ether – whose Ethereum blockchain technology forms the base for most ICOs – has risen even more sharply from less than US$10 at the start of the year to US$300 currently.

Soaring prices of bitcoin and ether

Source: Coindesk.