By
Steve Muchoki
April 19th, 2024
Despite the rapid growth of ICOs since the beginning of the year, more than half of all the crowdfunding projects failed, says new ICO market research.
ICORating, a leading ICO rating agency, has published an independent analytical report on the ICO industry for the second quarter of 2018. According to the research, the market has more than doubled over the course of the year, with ICOs raising over $11 billion in investments. The sum has grown ten times since 2017.
In Q2 of 2018, the report says, 827 ICO projects raised more than $8.3 billion in funding, showing a 151% growth. If compared to Q1 2018, the investments amounted to $3.3 billion. Meantime, blockchain project EOS, accounted for most of the surge, collecting over $4 billion in a year-long campaign.
Still, it looks like the quality of new ICO projects is getting worse. The agency found that 55% of all ICOs launched in Q2 2018 failed to reach their target, what is 5% more than the number of unsuccessful projects in Q1 2018.
According to the research, 57% of the ICOs wanted to raise money at the idea stage, but they eventually raised the lowest amount on average. “The highest percentage of unsuccessful ICOs in terms of product readiness arose from projects at the idea stage. 58% of such projects failed to raise more than half a million dollars,” the study says.
In total, the percentage of startups that couldn’t surpass $100,000 in investments grew from 13% in 2017 to more than 50% in 2018. Just 7% of all the projects managed to get listed on exchanges, while the time for listing increased to 6 days.
The top ICOs managed to gain nearly $50 million, with the average campaign duration amounting to 63 days. Only 3 projects raised all their funds in 1 day.
“The number of projects that were able to be listed in the shortest time possible after ICO completion decreased by 22%,” ICORating reported.
“In general, these changes might be connected with stricter exchange listing rules, for instance, the situation with IDEX. Another factor is the change in the requirements for sufficient token liquidity. It is worth mentioning that 9% of the projects that announced their ICOs have already deleted their social network accounts and websites this quarter. 2% of the projects that claimed they had raised more than 100,000 USD have also done so.”
As far as geography, most of the projects (46%) were located in European countries, while North America became a leader in investments, bringing more than 64% of funding. Meanwhile, the projects from Asia recorded a growth in funding attracted (+20%), but a decline in the total amount of projects (-40%).
Financial services, per the report, led all other industries in the amount of investment attracted and the number of projects. Other most popular industries include blockchain infrastructure, banking and payments, internet and telecommunications, drugs and healthcare, and social media industry.
Last month, Satis Group conducted a similar research and found that 81% of all ICOs launched in 2017 turned out to be scams. The study shows that despite the ongoing growth of the market, investing in ICO projects is still too risky.