The ICO market is changing. More and more new projects are deciding to issue and sell their own tokens, but with such enormous competition, it’s getting harder to raise funds. The cost of organizing a successful ICO is already up to $1 million, while most projects don’t have a working product or revenue. Many of them need to recover what they’ve spent and attract investors in order to survive.
During the Playkey ICO, which will end on November 30, investors have put in $8,6 million. Maximum issuance is set at 60 million tokens, and the planned soft cap of $5M has already been exceeded.
How are these same reference points looking on other projects? We followed five projects with ICOs that also started on November 1, 2017. Some of them have already concluded their campaigns, while the others don’t have much time left.
Crowdholding, a decentralized platform for innovation that connects entrepreneurs with potential users and product testers, has set itself the goal of raising at least $1 million on its ICO. This is the minimum threshold for its ICO to be recognized as successful. Its hard cap is dozens of times higher: $50 million, enough to not only launch the product, but to quickly scale it up.
But five days before the end of the ICO, only 23% of the minimum* has been raised. Most likely, investors will get their money back: That’s what the project’s white paper indicates for the case of a shortfall.
The Districts Project is planning to build a virtual-reality city, and has already brought in $1.5 million for it. True, it’s only 6.82% of the maximum amount (hard cap), which the project measures in its cryptocurrency, 150 million 3DCoins. The soft cap and the minimum threshold are much lower: 70 million and 30 million tokens, respectively. But even these levels have not yet been reached. Just a little more than 10 million 3DCoins have been collected.
The project’s road map assumes that its expansion will start in 2018, but most likely they will have to put the brakes on these plans.
The first decentralized startup accelerator might come into being, if this ICO is successful. The project’s creators argue that ICOs in the form we know them will soon cease to exist: “Many companies are collecting many millions of dollars, despite the fact that 80% of them don’t even have a finished product. Rocket ICO is introducing the concept of ‘ICO 2.0,’ based on a system with rounds of funding.”
In its first round, Rocket ICO is offering investors 2 million tokens and hopes to raise about $2 million. In the next rounds it will be 5 million and 10 million tokens for the corresponding sums. So far $465,000 has been collected. With the proceeds from the first round, they plan to develop a working version of the platform. And it seems that doing so will require some belt-tightening.
Playkey is not the only project for gamers that launched its ICO in November. eSports plays in a similar niche: creating a portal for training, charity tournaments, sharing content, and just communicating. The ICO has already passed its soft-cap bar: Instead of 2 million euros, 5.8 million has been collected. In total, the project plans to raise 15 million euros, with a hard cap at 25 million.
Whether it can raise the funds by December is unclear. But if they can’t do that and the project’s launch gets reined in, you know what other gaming product — already working — you can invest in until November 30.
Just for those who are saddened by this story, here is an example of a successful ICO that was completed in two weeks. The first decentralized platform for publications stated two goals: a soft cap of $500,000 and a hard cap of $1 million. The amounts are small, but then the project has successfully crossed both thresholds, raising a little over $1 million. Some projects, though, collect this much just at the pre-sale stage — but their plans are more ambitious.
According to Publica’s road map, by the end of next year investors in the project will already be able to spend their tokens on the first books appearing on the platform.
By the way, on the subject of small amounts collected, it seems that the champion for November is the P2P cryptocurrency exchanger Payfair. The team put its hard-cap target at $170,000 and exceeded this low bar by collecting $186,000. More ambitious projects are unlikely to do so well, but this is the reality of a changing market. Winter is coming. And by the time it starts, we’ll see which of the companies that launched ICOs at the start of November will remain in the game.
*Here and afterwards, all data are for November 25, 2017.