Nov 26, 2018
Beyond FOMO: Venture Capitalists seize low price environment to invest in ICOs
Venture Capital investments up +100% QoQ in Q3, 2018.
The line between crowdfunding and institutional participation is getting blurred. Venture Capitalists are investing in ICOs and blockchain companies.
VCs have shown an inclination towards buying tokens straight out of pre-sales, SAFT contracts, and other regulatory compliant offerings such as STO’s, which was almost non-existent a few months ago. More recently, investors have been taking stakes in blockchain companies even before their ICO.
Q3 2018 Private Funding hit an all-time high
Companies behind ICOs have strongly preferred investments during Pre-Sales vs. Token Sales. In 2017, 630 ICOs conducted a pre-sale round as compared to 957 ICOs during YTD 2018, over 60% increase.
Private funding almost doubled to ~$5 billion YTD 2018 from $2.6 billion in 2017
Top investors such as Fenbushi Capital, Pantera Capital and Andreessen Horowitz have invested in interesting projects both in Blockchain participants as well as companies planning for an ICO.
The leader in the pack is Digital Currency Group followed by Blockchain Capital.
As the market has developed, companies have realized that professional investors are not contra crowd sales option. Efficient capital markets, pending regulatory reforms and increased mainstream industry adoption, have been a few factors influencing this shift.
ICOs, which once used to allow everyone to invest, are also considering private placements to accredited investors. As the market evolves and evolves faster, one may soon expect other professional listing services such as under writing, securitization, etc to be a part of the traditional ICO universe.
Interestingly ICOs such as Telegram, Dfinity etc, did NOT conduct a public sale. Retail investors had to wait until their tokens were listed on an exchange.
Blockbuster ICO on the rise
There are also certain ICOs that have raised hundreds of millions — even billions without even having any working prototype.
Filecoin ICO belonging to Protocol Labs Inc parent company, which is a blockchain data storage startup, raised $257M, while EOS,an ICO well known for it year long sale raised over $4B which is highest funds raised in crowdsale till date.
Big investments in Private funding in last two months
Seba Crypto in September
Seba Crypto raised $104 M in a Venture round from investors Black River Asset Management and Summer Capital in last month.
Coinbase in October
Coinbase raised $300 million in a Series E round from investors Y Combinator, Andreessen Horowitz, Tiger Global Management, Wellington Management, and Polychain.
Corporate venture wings want a bite too
From just speculations a few years ago to raising over $2 B during 2018 alone. ICOs are becoming impossible to ignore even by the risk-averse Institutional financing community as the token sale shifts to private Sales and STOs.
This change in attitude is best exemplified by the fact that there are relatively low returns in traditional centralized projects.
To Sum it up
This shift of preference is a mixed bag. The brighter side to this is the risk is shifted from individual investors to accredited institutional investors and on the other side, it is still risky as regulators still haven’t fully weighed in on them.
With new regulations coming in every day, this trend is expected to find more craze in the investors as well as companies.
Disclaimer: This is not financial advice. InWara does not promote/demote any company/ICO. Opinions, statements, estimates and projections in this message or other media are solely those of the individual author(s). They do not necessarily reflect the opinions of Inwara or any of its affiliates (“Inwara”). Inwara has no obligation to update, modify or amend this message or other media, or to otherwise notify a recipient thereof, in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. Any content, information and any materials provided in this message or other media is on an “as is” basis. Inwara makes no warranty, expressed or implied, as to its accuracy, completeness or timeliness, or as to the results to be obtained by recipients, and shall not in any way be liable to any recipient for any inaccuracies, errors or omissions herein. Without limiting the foregoing, Inwara shall have no liability whatsoever to a recipient of any message or media, whether in contract, in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by such recipient as a result of or in connection with any actions, opinions, recommendations, forecasts, judgments, or any other conclusions, or any course of action determined, by it or any third party, whether or not based on the content, information or materials contained herein.**
