Asia Owns Most Elite 2018 ICOs — And Other Findings From The Top 10 Deals
The crypto craze continues to captivate the planet:
The biggest ever Initial Coin Offering (ICO) raised $850,000,000 (USD) for New York based messaging app Telegram at the close of 2018’s first quarter (Q1). Not a typo — that’s $850 million.
The interest in Telegram comes at a time when the price of Bitcoin has been plummeting to new lows for 2018. In December it was once as high as $20,000 (USD) but the cryptocurrency was valued at $6,600 on Friday the 30th of March — the last day of Q1. The losses follow moves to step up regulation of crypto in Asia and Europe.
Driving the price explosion over the past few years has been the potentially transformative financial transaction technology blockchain. From Bitcoin to Etheruem the value of cryptocurrencies has ballooned by thousands of percent over the last 12 months. With this increase, we’ve also seen a rise in crypto millionaires — on paper at least.
It now seems that tech startups everywhere who need to raise funds are increasingly thinking that instead of taking on debt, giving away equity or entering into a convertible loan agreement (CLA) an Initial Coin Offering or digital token sale is the way to go.
Analysis of business information plaftform Crunchbase’s top 10 ICOs for the first quarter of 2018 shows some interesting insights. Let’s take a closer look at the data.
Highlights from the 3 top ICOs for the first quarter of 2018:
While these ICOs made the headlines, many others fall far below the issuers’ expectations. A number of factors have an impact on success beyond investor’s sentiment. There’s no substitute for strong marketing, a viable business model, a credible team and fantastic technology. Here’s how the top three company’s on Crunchbase’s list are making it happen.
Telegram Messenger is an encrypted chat platform with 200 million monthly active users worldwide. It’s also a popular platform for crypto fans who use it to launch project token sales/ICOs. So with its own ICO, Telegram is aiming to leverage its existing user base to create a solution for cryptocurrency payments by generating a cryptocurrency that is used functionally for payments.
The company’s vision for what it is calling the ‘TON wallet’ is that it will become the world’s most adopted currency wallet. Management says this cryptocurrency created by its ICO will be closely integrated with the chat application and attempt to provide solutions for file storage, payments and anonymous browsing.
As for the founding team, there isn’t enough space here to share the full fascinating and complicated story of this messaging app. Launched in 2013 by Russian brothers Pavel and Nikolai Durov, the pair had previously founded Russia’s version of Facebook, Vkontakte (VK). They lost control of VK for refusing Russian government demands to block dissidents and say they decided to leave for New York to maintain their personal integrity and stay true to their values.
Since leaving Russia in 2014 to launch Telegram, Pavel Durov and his core team of developers began by living only a few months at a time in different locations. They initially started building in Berlin, but apparently did not stay because they could not secure visas for everyone. As a result, the team moved onto other locations including London, Silicon Valley and Finland.
This Telegram ICO wasn’t for your average armchair investor. TON Issuer Inc was formed during February 2018 in the British Virgin Islands (BVI) and according to financial documents, the corporation raised $850 million (USD) in a first round in the same month from 81 investors. This transaction isn’t ranked on Crunchbase. Meanwhile, Crunchbase sites a 29th of March offering for $850 million that included 94 investors as the top ICO so far this year.
As of April 2018, there are reports that the firm has actually raised $1.7 billion (USD) total through an ongoing ICO. Company officials have not made any public statements regarding its ICO yet.
The only official sources of information for these deals are two Form Ds that Telegram filed with the U.S. Securities and Exchange Commission (as of writing this on 7 April 2018). The first is dated February 13th and totals $850 million. The second date March 29th also totals $850 million. In any case, it doesn’t matter which figure you choose to go by, $850 million for each of two separate filings or $1.7 billion total in Q1 2018 – Telegram has still by far just had the largest ICO ever to date.
Eximchain is a software development company focused on supply chain applications. From supplier credit to inventory management, Eximchain helps businesses connect, transact, and share information more efficiently and securely. Eximchain’s mission is to provide blockchain-enabled tools to transform the global supply chain by integrating SMEs and increasing transparency.
According to Eximchain, shareholders lost over $5.2 trillion (USD) in potential revenue last year due to the lack of transparency, connectivity, and agility in the global supply chain. Eximchain applications correct these inefficiencies and have designed their technology to be used by both SMEs and enterprises engaged in logistics and global trade.
All interested ICO participants were required to fill out Eximchain’s whitelist form and pass an identity verification process called Know Your Customer (KYC) in order to gain access. Additionally, the company’s governance model relies on quadratic voting. People from the US, China and OFAC sanctioned countries could not participate in the token generation event. It closed in March for $20,000,000.
Eximchain was founded in 2015 at the Massachusetts Institute of Technology (MIT) where its founders earned masters degrees. The company was also accelerated by Mass Challenge in the 2016 Boston cohort. Its now based in Singapore.
AB-CHAIN says its reinventing digital advertising with a next generation way to do Real Time Bidding (RTB) using blockchain and artificial intelligence to drive traffic for ICO companies. It works by allowing advertisers to buy ad space from publishers using cryptocurrencies including its own new currency, the ABC token.
The company says its on a mission to provide businesses with cryptocurrency budgets a quick and easy way to publish advertising on the internet without having to convert crypto to traditional currency because they believe this will provide for a high return on investment.
AB-CHAIN believes there’s a solid market for them because they say that most companies raising funds through an initial coin offerings today are still actively developing their products and that many of these products will become fully available during 2018. Once these products are on the market, AB-Chain believes they will need to advertise them.
As they see it, the problem is that most publishers don’t accept cryptocurrencies, primarily because the general demand from traditional companies isn’t significant enough to justify the adoption of a new type of payment. However, in theory, AB-CHAIN thinks company budgets in cryptocurrencies will increase going forward as a result of more of them deciding to raise capital through an ICO.
This is where AB-CHAIN sees the opportunity to provide companies that have raised money through an ICO with an ad network where they can buy online advertising using multiple types of cryptocurrencies without the need to covert the to traditional currencies.
AB-CHAIN’s vision is to become the most technologically advanced advertising network by using artificial intelligence and machine learning and in March investors backed their plans with a $1,850,000 (USD) initial coin offering in Hong Kong.
Location, Location, Location:
Now let’s drill-down into the geographies where these ICOs are taking place. The majority of the 10 top ICOs on Crunchbase so far this year have happened in Asia. Hong Kong holds 30% of the top offerings as does Singapore. The United States hold two of the top 10. Meanwhile Australia and the Cayman Islands also have one entry each in the top 10.
The foundations of a successful ICO:
Ensure demand for tokens:
If a company wants to seek ICO investment, the companies ranking in Crunchbase’s top ten tell us that a business model or technology needs to be something that will attract crypto investors. They generally seem prefer ICOs that focus on selling digital tokens that have a clear use in a blockchain application.
One of crypto’s main hurdles is that there’s not enough users yet to make it universal. The utility of the tokens in an application with a solid concept and strong potential means that there should be a demand for those tokens if the application succeeds. So if a startup is issuing tokens that aren’t pegged to the underlying business or technology in any way, it’s probably meaningless.
Master legal and regulatory ICO frameworks:
Those who have had a successful Initial Coin Offering usually have been able to build credibility for their business beforehand. In order properly get ready for an ICO, there are some things that need to be considered from a legal and regulatory perspective. These terms vary by country so you’ll need to follow the rules for the jurisdiction where your business is registered.
Note: This article does not make any investment recommendations for or against ICOs in general or any company/specific ICO.
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