Venture capitalists are investing huge sums into blockchain projects, despite the prevalence of ICOs as a form of fundraising in the space.
According to a study by Diar, with data provided by Pitchbook, the first three quarters of 2018 have seen more than $3.9 billion raised for blockchain projects through traditional VCs, which is a massive 280 per cent increase from 2017.
The report reads: “Initial Coin Offerings (ICOs) were supposed to disrupt how early ventures raise capital. And many were calling for the end of venture capital as we know it. But markets have corrected, and token values have continued to plummet.
“Non-equity ICOs are not only scrutinised by the regulators but the founders also have very misaligned incentives as there is no contractual obligation to deliver a product – a reality that to date seems to be the case with few launches, and even less adoption.”
Seventy per cent of tokens are now worth less than they were during their ICO, the report states, with many dropping by more than 90 per cent from their high points.
It’s little surprise, then, that traditional VC funding may be looking quite appealing to some blockchain firms, and the sharp increase in this area points to a large embrace of crypto and blockchain from the mainstream.
Data shows that almost 2,000 investors have invested in at least one blockchain company, and approximately 52 per cent of investments come from those who are not exclusively devoted to blockchain-based projects.
Activity is most prominant in the US (79 per cent), with China (12 per cent), South Korea (2 per cent), and Singapore (2 per cent) coming up behind.