Just under 50 per cent of ICOs released this year had no business plans behind them, new research reveals, pointing to a tendency for investors to hand over their money more freely.
The study, conducted by agency ICO Rating, reports that $3.3 billion dollars has been raised via completed ICOs over 412 projects so far this year, though that number excludes Telegram’s $1.7 billion fundraising.
Interestingly, only 9 per cent of ICOs emerged from pre-existing businesses, and 46.6 per cent “had no development before their ICO compaign”. Furthermore, 65 per cent were utility/hybrid tokens, and just 3.8 per cent were for cryptocurrencies.
The bad news – the average return on investment for ICOs is just 49.32 per cent, and only 17 per cent of tokens traded on the exchange did so above the price of sale.
Sasha Kamshilov, CEO of ICO Rating, said: “Having a traditional business does not always rule out their use of blockchain with their products, however, this can sometimes create some discord amongst the perceptions of entrepreneurs.”
This report is perhaps indicative of the new way investors are looking at ICOs as compared to more traditional VC fundraising rounds. For blockchain projects, an idea appears to be enough to get initial interest, but trends show that this may not be the wisest strategy.