Doing an ICO before you have a product

ico_traction

The question of when you should raise your ICO is often contentious and often overlooked by new entrepreneurs seeking to build their dreams. There are two ICO key trends around what kind of projects are raising funds.

User Traction Wins

We are seeing more ICO’s that have existing businesses backing the ICO projects. Often these businesses are connected and can help bring the new projects that are blockchain related to the market.  A good example of this is Telegram ICO which is seemingly getting investor interest for their huge $1.2Bn ICO. This ICO is not closed yet but does serve as a good example of user traction appealing to investors. Some of the reason for the telegram interest is due to the ICO use cases around community development.

Traction for these projects will be viewed in the following way:

(Number of users) x (Product related to blockchain/ICO) = ICO relevance 

The “ICO relevance” is the quotient that will used by funders to help them establish their interest in the ICO.

Core tech problems

Building core blockchain technology is also a good way to raise funding from the community. The technology needs to be dealing with core developmental challenges such as Bluezelle (database) or Filecoin (storeage) that deal with blockchain technology projects that fill important gaps in the ecosystem.

Other ICO Funding

There will continue to be funding for good teams, niche ideas and scams that involve offering quick returns and slick marketing. However as the ecosystem matures there will be a rising to the top of the better projects and this will make it easier for funders to find good projects. This will likely happen with the help of licensed exchanges and ever growing community of money finders and financial advisors.

Market Trend: Ecommerce ICO’s incoming

As investors and entrepreneurs we have seen many iterations of the e-commerce over the years. Traditionally this market has seen low margins and even lower barriers to entry. A quick glance at Tokenmarket upcoming ICO’s shows that in the next week there will be 3 ecommerce ICO’s out of the 10 featured on the site.

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Size of ecommerce ICO’s

Traditionally the ecommerce ICO’s have raised smaller amounts and have not had strong use cases for their own coin’s. In ICO reports ecommerce has not traditionally even been a category and this gives a good indication of the lack of appetite for these offerings historically. A notable exception is likely to be Overstock ICO who have indicated they are looking to raise $500m in their ICO later this year on tZero.

What is interesting is that they in fact plan to sell off their retail business according to their CEO (Patrick Byrne) and focus on their blockchain businesses.

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What does this mean for traditional e-commerce retailers and ICO’s?

The use case for a token offering specific to one particular ecommerce store is low when you think about utility tokens. However in the future with security tokens this may change as their could be more economic incentives offered vs technological rationale on why the new coins may have more value in the future.  The fact that Overstock is getting planning to move away from the retail space may tell you something about this opportunity or just be an indicator that they don’t fancy the prospect of continuing to battle it out with Amazon.com the behemoth in the market.

Bluzelle an example of leaving money on the table (expect a surge in price)

Bluzella ICO

Disclaimer: we did not get to own any Bluezelle tokens (BLZ) however we are friendly with Pavel (CEO of Bluezelle) and unfortunately our cheque size was not big enough to get into their PreICO round by the time we offered cash.

Today we found out that Bluzelle (BLZ) have closed their ICO.

Bluzelle has an amazing list of investors and advisors. They are taking on the challenge of putting a database on the blockchain. This is going to be an important building block to future projects on the blockchain.

The developers are seemingly being conservative with their cash grab and have limited their fundraise to a sober $19.5 million hard cap. The 7,471 potential investors who got through their KYC process (which closed a week before the ICO) are limited to less than 1 ETH each (0.9397 ETH for the 421 investors in “Group 1,” 0.4698 ETH for the 7,051 in “Group 2,” according to Bluzelle’s Jan. 16 Telegram post).

The next phase around actually building the project will now start in earnest and we hope that some of our future projects can use this database service.

Crypto Currency and ICO Legislation in Asia

Screen Shot 2018-01-22 at 12.11.36 PMIDC did a good infographic around the legislation in Asia for ICO’s and crypto currencies.

Legal ICO markets

There are three main ICO jurisdictions that are seemingly legal to do an ICO in Asia and those are Singapore, Japan and the Philippines. Out of the three Singapore has the most traction.

Grey Area ICO markets

Countries that have still yet to declare their positions formally on ICO’s are India, Malaysia and Taiwan.

Banned ICO markets

Countries that have come outright to ban ICO’s are Vietnam, China, Indonesia (by the fact that they have banned crypto currencies).

Summary of ICO in Asia

In summary the Asian governments have taken a cautionary approach to ICO’s and digital currencies in general. We can expect that over the coming year there will be more legislation and news from different markets based on their perceived need and the individual jurisdictions requirements (threats) around crypto currencies and ICO’s.

 

 

 

ICO Market Trends and News

The ICO market is fast moving and its interesting to see the volumes, capital and sectors that are raising funding.

A quick look at the types of ICO’s and their average funding show that Dapp marketplace, blockchain, distributed storage have attracted the most funding. This is part of an overall trend towards investors wanting to invest in fundamental building blocks over the blockchain ecosystem (storage and core tech). This could be for two reasons:

  1. It makes sense to back core technology as crypto currency is still in its infancy.
  2. Many of the early crypto adopters are technical in nature and can understand these projects.

ICO Project Types

The funding volumes have started to become consistent and have not fallen off as much as some of the doomsayers were predicting.

ICO Capital Raised

The interesting trend is that the average funding has been growing which is an indicator that the number of ICO’s successfully raising funding is going down. The indicators are that there are lots of ICO’s taking place however the funders are becoming more discretionary in the way they are selecting ICO’s.

ICO Average Raise

Coss.io Token Exchange

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There are many crypto exchanges but obviously if you are planning to do an ICO you need to list your tokens somewhere.

Coss.io is a relatively small crypto currency exchange when compared to the larger crypto exchanges. The exchange is based in Singapore and is still relatively young having only started in the past year at the time of writing this.

The exchange also has its own token called the COSS token. The token has value due to the fact that half of all the transaction fees are paid out as a dividend.

coss token

The good thing about the COSS platform is that it will list new tokens and is always looking for interesting tokens that can attract customers due to the offers that COSS can offer them.

In order to get your token listed will probably require the team to build a direct relationship with the team and offer COSS a good deal for their users.

Gibraltar Exchange Rock Token

gbx, Gibraltar exchange
Gibraltar Token Exchange

The Gibraltar exchange is one of the most interesting token exchanges in the world right now as it will be one of the few licensed crypto exchanges in the world. The Gibraltar exchange is issuing its own token that will be the effective currency on the exchange.

The fact that you will be able to issue a token that is a security is very interesting and this is one of the most innovative features about the token exchange. Many ICO’s would make lots more sense if their tokens were in fact securities and not utility tokens. The exchange  will have a more traditional sponsor like London AIM.

The Sponsors will vet the ICO and will help the businesses complete their token listing. The listing fees will be paid with the Rock token (RKT), which is the Gibraltar exchanges own token that will be used to paid for the GBX membership, Listing fees, trading fees, early access etc.

GBX

The Gibraltar legislation has made crypto currency legal and is ICO friendly. The Gibraltar Financial Services Commission (GFSC) has a new regulatory framework for crypto token sales.

As of writing this article the GBX exchange has not yet launched its services to the market however it is expected to launch at the end of Q1 2018.

 

 

 

RenRen ICO

Renren icoRenRen is planning to raise funds through an ICO. This is interesting for a couple of reasons:

  1. China previously banned ICO’s
  2. First large listed company doing an ICO

The market seems to have reacted positively to the news with the stock price increasing by 47% on the news. The new token will be the RRCoin. More information about the RenRen whitepaper seems to only be in Chinese.

This is inline with our 2018 ICO predictions in that this is the start of the larger businesses doing ICO’s.

This is also a signal that the Chinese  market will soon open up again and should signal a possible boom in ICO activity if this does open up again as the Chinese market was a huge contributor to the ICO market until the ban. RenRen is listed on the Nasdaq in the USA and therefore may be circumventing this but the fact is that the whitepaper is all in Chinese and this is a good indicator that the focus will be on the Chinese market.

Some pundits are skeptical about this ICO as they say that RenRen is not doing well and this is something of a money grab by a listed company however the fact that this is happening is overall positive.

 

2018 ICO & Crypto Predictions

2018 Crypto predictions

In 2018 we predict that there will be a number of trends ICO’s:

  1. More real companies that have significant traction (users, revenues, etc.) will do ICO’s
  2. ICO’s will move to central hubs versus the current distributed individually run events
  3. The media will call the ICO market as a bubble and about to die every day even as the ICO market matures and becomes more robust

The bigger prediction that most people are not talking about is that token issuances that are securities will dwarf utility tokens. This will be driven by non tech token generating events “TGE’s” in traditional fund sectors. This will become possible through the establishment of more regulated exchanges that have government issued licenses and make it possible for people to trade tokens as securities legally.

Miscellaneous predictions such as con artists, fake ICO’s and law enforcement coming into the picture with arrests etc. will happen however this was already starting to happen in 2017. The scale around this will be a lot faster than people realise and the critics will point to ICO’s being scams.

Enjoy 2018!