ICO Crowdsales No Longer Open to the Crowds
The concept of the ICO heralded in a completely new way for crypto companies to raise capital without having to depend on a handful of decision makers in Funds or VC companies with deep pockets. In the early ICO's, like Ethereum, there was a heavy reliance on the masses to provide the funds. For a moment, the crowd and institutional investors had equal access. But that changed quickly..
When the post-ICO token values started skyrocketing in 2017, the institutional investors moved in for the kill.
Soon enough we started to see large allocations of ICO tokens being sold off to institutional investors in early presale rounds at heavy discounts. The ICO issuers were happy to take the guaranteed early funding rather than soley rely on the crowdsale.
And the Institutional appetite grew..
After hearing about Pantera Capital's 25,000% ROI, more Hedge Funds and VC's flooded the market with funding, to the point where the crowdfunding was no longer needed. The crowdsales became more of an afterthought than the main event.
Think Blockport, Legolas, Storecoin or Polymath..
The only way for the crowd to access the ICOs that VC's and Hedge Funds are after is by joining an ICO buying pool. Often these ICO pools can act as an institutional investor to ICO issuers, giving them access to top tier allocations which then then to their members. The benefits of getting in on early rounds are astronimical, lets take dfinity for example:
People who aren't considered considered 'strategic' might be lucky enough to secure a main round allocation and pay 3.9x the price for tokens. These ICO buying pools are rising in popularity because they are often able to secure strategic allocations at a fraction of the ICO token price.
For months, ICOs have had the luxury of being picky about whom their funding came from, often selecting 'strategic' investors who bring more than just ETH to the table. Investors need to pitch to the ICO how they can play a strategic role in the business, and if convinced, the ICO issuer will grant an allocation.
But that was in a bull market..
What will happen in a bear market?
Will top-tier ICOs be forced to open up to the crowds again? Or are the VC's and Hedge funds here to stay? Or will the crowd have to rely on ICO buying pools to access the top tier ICOs?
Time will tell.
My team and I recently pursued an ICO after months of development, launched a new blockchain and built a beta. We did not do a pre-sale, we did not open to early investors although some did express interest and in the end just tried to delay our plan rather than add value.
so we launched the ICO / blockchain and beta on 15th feb and the response was extremely poor. We did not meet are modest target and we decided to refund anyone that participated in the ICO.
Unlike other ICO's that use an ERC20 token on top of Ethereum we launched a new blockchain and new coin forked of the Ethereum codebase. We inherited all the great features of Ethereum so we could launch and start with a great platform to build upon.
We watched as others moved in to space, rushing everything from their website to their crowdsale while we decided to focus and build a better quality offering and it was strange because other projects with much weaker teams, much weaker value proposition seem to raise a lot of ETH. Yet our team, with much stronger proposition, a blockchain, mineable coin & working beta got little interest compare to much weaker projects.
Regardless of the ICO target not being met, we as a team delivered on what we set out to deliver with zero funding, Just the collaborative efforts of 5-6 people.
The whole experience for us has been great, we have all learned new things and the experience of building a blockchain project bringing it to market and going through an ICO. We have not give up or walked away, we shared the experience with the community, refunded the ICO contributions and now increase the team size by another 6.
We now are pursing traditional funding while our increased team members that are skilled and experienced in Digital Marketing & Blockchain, one coming from a well known successful project have started our Initial Bounty Offering campaign (IBO) where we aim to distribute the coins that were originanlly up for sale at our ICO.
We had many approaches on the run up to our ICO and during our ICO from people and companies offering to market our ICO. they were making statements like guarenting x number of discussion pages on bitcoin talk. X number of followers on telegram/social media etc.
Also there was discussions with potential advisers but they all stopped when they requested bitcoin/eth upfront from the team that was made from volunteers. If we had the funds we would have loved to work with some of them but we had no pre-funding.
My view on ICOs today while they initially were seen as a great way for the masses to get involved and to side step traditional funding your analysis is correct.
With the influx of VC funds, high net worth individuals and institutional buyers/pools they are getting in prior to ICOs in private pre-sales or pre-ICO funding rounds initially seeding the team with capital needed to run a great awareness campaign which will attract a lot more people at the ICO stage.
As we had no pre-funding of any kind when we launched our ICO we only had our team, friends and family to get the word out. We grew our social channels and reached out to potential strategic partners but this was not enough to generate an engaged and active community. Which showed in the results of the ICO.
You can read out last post on this here https://medium.com/atlas-announcement/the-future-of-atlas-d3792026ca1f
@thewhitewhale DFINITY telegram group admins and Dominic Williams (Chief Scientist) did refute these claims though. ICODrops jumped the gun a bit here, IMHO. Let's wait and see.
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