The crypto market is down and for many, ICO’s in the past few months have mostly been considered failures for raising $1 million or less. How did we get to this point? Are all our standards skewed? I’ll speak here a little about why I believe mostICO’s don’t need to be raising tens of millions and why Jarvis chose to organize a Token sale and aim for $500K.
The Rise of The Mega-ICO
I love Kickstarter and I’ve followed it for years. It’s a great pre-cursor for ICO culture and the idea that you don’t have to go to VCs and big investors but that you can raise funds from your community of future users and supporters! I remember sometime last year, while the ICO peak was still in full swing, I received an email from them celebrating that that one of their projects raised $60, 000 — this was in the middle of the huge ICO peak, when some crypto projects were raising $60 million. My initial thought was “Only $60K?!” and then, with a little disappointment I realized I had forgotten the real value of money, as I had become accustomed to the crazy amounts we see everyday in crypto...
The reality of launching a startup is that you don’t need crazy money. No one does. In fact, the more money you raise as a start-up, the worse you have it. Remember Silicon Valley, where PiedPiper — a start-up in the IT industry were contemplating whether to accept an $18 million investment? Wondering how they’d manage the expectations of such a large seed investment for their young idea? Well, perhaps if ICO projects had done the same last year, their supporters would have more realistic expectations and wouldn’t find themselves so disappointed in the industry. I am in no way pointing fingers, but simply saying that ICO’s are most often start ups and they should think and plan their development as such. Facebook started with $100 000 seed investment. Google’s first seed in 1998 was $100 000. Amazon launched with a family investment of almost $250 000. The scale of comparing these amounts to EOS’s $4,1 billion is almost incomprehensible.
The Fall of The Mega-ICO
We all know what this madness lead to — the mega-ICO hype and a blockchain market capitalization from $17.7 billion to $612.9 billion in 2017. Let that sink in.
In an environment of such magnified interest and hyperbolized success, we’ve seen great, good and bad projects launch. Some very poor projects, with barely an idea, have raised millions just from announcing their plans on BitcoinTalk. Understandably most sub-par and under researched projects have failed, with over 46% of 2017’s ICO’s falling short of delivering their goals and products. If 2017 was the year of ICO over-saturation, then 2018 was the year or rationalizing these expectations — more skepticism and careful investments and more planning on the side of the project leaders and builders.
Jarvis only aims for a $500K minimum and we’ve been asked many times why we have such a low bar. Realistically, though, $500 000 is a lot of money! Especially, since we have been heavily funded by our community of 202 initial supporters, who followed our journey since the very beginning! Many big corporations started with less, as I mentioned earlier. Conversely, many huge ICO’s have raised millions and yet failed to realize their project. We know we need $500K to run the exchange for 1 year. If we raise $2 million, it just gives us more flexibility and allows us to expand our aims for the year. The $500K minimum means we can run the exchange as it is now and work to perfect its UX and backend. With $2 million, we could, for example, acquire more licenses, hire ambassadors to extend into the Asian market, run bigger and bolder marketing campaigns to acquire more users and expand the portfolio of assets we support. Then, all additional funds, reaching up to the $21 million we have placed as a hard cap, we will use to provide greater liquidity for the exchange, to rely less on third party liquidity providers and lower the exchange fees.
The hype of 2017 turned ICO into another speculation tool — a topic we discuss more in another of our articles. To make the ICO world more fruitful, we need to go back to looking at them as investors, not traders. We have largely succeeded in helping ICO funders become more aware of scams, understand how to measure the viability of an idea or project and explore each ICO in terms of how likely it is to succeed.
With the crypto market down, now many ICO investors are also learning another key aspect of seeding an idea — the value of money. Moreover, they are asking the hugely overlooked question — “Why does this ICO need $20 million?” and “How will the project meet the expectations that a $5 million seed fund suggests?”.
Raising $20K is great - $20M is better for sure.. but let’s go back to more realistic numbers. Then, perhaps we can move on to more realistic and realizable ICO projects.
Pascal.
The possibilities are limitless
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