Having just completed a study of last years ICOs, news.Bitcoin.com can report that 46% of them are effectively dead, despite raising over $104 million.
The pace at which they’ve withered and died is a bit of a shock. Tokendata, an ICO tracker, lists 902 crowdsales which took place last year. Of these, 142 failed at the funding stage and a further 276 have since failed, either due to taking the money and running, or slowly fading into obscurity. This means that 46% of last year’s ICOs have already failed.
Last year was without a doubt the Year of Bitcoin, as exploding interest in cryptocurrency fueled a massive pump to a high of nearly $20,000 per bitcoin. Some speculators took it to another level, investing in cryptocurrency projects through a lightly regulated process called an “ICO,” or Initial Coin Offering, in which a startup sells its own crypto token to raise money.
Many commentators were extremely skeptical of ICOs, and rightly so as many of which were outright scams. That skepticism was well founded with failure rate at 46%. Another 113 projects are classified as “semi-failed,” because their teams have gone off the radar or their community has withered away.
To give some perspective to the situation it should e noted that as many as 75% of all startups backed by traditional venture funding fail, and 30 to 40% of those take all of investors’ capital with them. Out of all new companies started in the U.S., a little over 20% fail in their first year.
However, it should be noted that a disproportionate number of ICO failures have unfolded in a matter of months. Also, not all of the closed projects are actual ‘failures’ as many produced no product at all, and a good number probably never intended to. Some were simply “exit scams” whose founders disappeared with the money they raised, and faded out, but probably had the same fraudulent intent.