It isn't uncommon to see startups never launch or find a product-market fit and fold after a short life, once funding runs out and the team doesn't manage to raise additional funding.
Anybody thinking that this would be different in the world of blockchain is whether naive or has drunk too much Blockchain Kool-Aid™️.
On the back of the huge rise of cryptocurrencies and blockchain based projects, in 2017 as well as the increased visibility of this new type of fundraising, Bitcoin.com has investigated how many ICO projects which raised in 2017 are still active.
Or in other words: how many 2017 ICOs have failed so far.
Photo by Rubén Bagüés on Unsplash
The Bitcoin.com used the data tracked by TokenData and managed to monitor 902 2017 ICO projects. Of the monitored projects, 146 didn't manage to raise sufficiently and failed at the ICO stage itself. Another 276 projects have since failed or disappeared into oblivion because of inactivity or pulled a runner.
This means that a whopping 46% of 2017 ICOs have failed withing less than 18 months, many even within less than 12 months.
A realization possibly even worse is that according to Bitcoin.com a number of still active projects is lower than the left-over 54% because more than 100 projects (113) have become rather inactive in communication or never managed to grow a community large enough to stand a chance to survive.
Adding these 113 semi-failed projects to the number of failed ICOs increases the failure rate to a whopping 59% (531 projects) or almost 2/3 of all projects which raised via an ICO in 2017.
Trawling through 900 ICOs in one sitting is a deeply depressing experience, news.Bitcoin.com can report. Abandoned Twitter accounts, empty Telegram groups, websites no longer hosted, and communities no longer tended are par for the course. A digital graveyard, complete with metaphorical tumbleweed, characterizes the crop of 2017 that decided to take the money and run. Many raised zero; some raised a couple of thousand dollars; and a handful raised over $10 million. In each case, the end result was the same though: no MVP, no alpha release, and no contribution to the decentralized web for the betterment of humanity.
Naysayers, and also crypto specialists, will, of course, claim that many of those ICOs smelled fishy from the start or didn't have the team to back up their claims, or generally were too ambitious.
But Bitcoin.com's analysis once again highlights how difficult it is to launch a project and lead it to success. Which may be even more complicated if in a decentralized world than with more traditional internet startups, no matter how much money was raised. That often due to the sheer complication of blockchain projects and the need to grow a sufficiently large community. According to Bitcoin.com several of the projects which failed at the ICO stage may try to raise again this year.
Photo by Matt Lames on Unsplash
While there may be specific details to look for when deciding whether to invest in an ICO or not, especially in team setup, nothing can protect investors from a team which decides to pull a runner or becomes demotivated because development, or community growth, aren't as simple and successful as expected. Even vesting terms for founding team members are not a protection for investors at that point.
Do your homework before investing in any ICO, don't hesitate to ask peers and first and foremost: don't invest money you can not afford to lose.