In the year 2017 and the beginning of the year of 2018, thousands of ICOs saw the light of day. Numerous companies, tech startups, and established businesses have used coin offerings as a way to raise capital. For investors, ICOs were a great way to obtain a high return on investment (ROI) and high profits. However, times have changed, the markets have experienced severe downturns and the crypto space has evolved.
A few months ago, before the bear market, initial coin offerings were extremely popular and widely sought after by crypto investors. Back then, most projects would sell out all their coins or tokens in the first round of the offering, and would eventually raise millions of dollars. ICOs were getting sold out in minutes. Investors would play and speculate to try and find the ICOs that would provide the highest returns. «Which coin has the best future in terms of value? Which token will 10x in the next three months?». The projects themselves didn’t even matter to investors most of the times; it simply needed to be promising and to show good potential for profit.
Many projects, that occurred years ago, for the most part, experienced incredible returns. NXT is one of the biggest ICOs that the crypto space has known and now has a 598054% return (source). Ethereum, which started at a $0.311 ICO price, increased by + 147877% and is now worth around $223 at a time of writting this. These are positive returns, but times have changed since.
Nowadays, the cryptocurrency and ICO landscapes have completely changed. Speculation over which token will leverage the highest returns has died and Reality has now taken over. Projects are not as successful anymore and initial coin or token offerings do not reach their objectives as easily as before.
I believe Neonexchange (NEX) was the most terrific project of all times and highest demand project. Its public token sale was scheduled for September and “only” raised $21 million out of $25 million, which represents only 87% of the expected capital raised. NEX had a hard time reaching the hard cap. Moreover, the ICO didn’t sell out in round one, which used to be the case in the past in most ICOs. This and countless other examples show the shift in the space, especially for coin offerings. The days where investors would invest thousands of dollars without even knowing the projects are over.
Raising capital through digital currencies is now very different than how it was before. According to Reed Sutton from the ICO Market Weekly Review, «the ICO market appears to be more mature». Venture Capitalists are now more proactive and are paying greater attention to projects before committing and investing their funds. Moreover, most projects are not reaching their fundraising goals. Crypto investors are also more demanding and scrutinize companies that have had ICOs in the past but that haven’t delivered on their promises. Fewer risks are being taken and skepticism reigns within the space.
In my opinion, the only way to raise funds and reach hard cap is with a solid working product and the team. There is also a need for a reasonable valuation of the company done from a professional company. I have been recently working with Investors and they want to see how team progressing day by day and their product is actually going to make a difference in the future. Moreover, they liking if projects don't ask whole funding/capital at once and rather release funds milestones basis. I know a few projects doing this and developing solid product and progressing exponentially day-by-day.
I also think that the newer types of tokens and coins that are emerging, like oil or gold-backed tokens, are changing the industry.
Looking forward to seeing how ICOs evolve towards the end of 2018 and in the year 2019.