Aggregated ICO-related data via Tokendata has been interpreted, and the survivorship rate is far from pretty. Of the 902 (tracked) ICOs that launched in 2017, 142 (15.7%) failed to make it past the funding stages, and another 276 (30.6%) ceased operations despite raising adequate funding.
This leaves 484 (53.7%) of the 902 ICOs still technically considered operative as they enter their second calendar year of existence. However, upon closer inspection the team at Bitcoin News determined that almost a quarter of the extant ICOs (113) show all the telltale signs of going bust. A frequent occurrence that led the investigative team to declare an ICO all but failed were cases of abrupt silence across all their social media channels, sometimes for months on end.
When assuming these 113 near-failing ICOs are on a one-way road to bankruptcy, it is not a stretch to write-off the ~$233 million raised between them and the 418 already-failed crypto start-ups of 2017.
Geographically, the countries that these failed ICOs called home tended toward those of lesser socioeconomic status. Of course, this is not to say that the more developed countries were not exempt from seeing some ICOs implode, they were just less prominent (proportionately).
Action has indeed been taken to lessen this appalling rate of failure in the weird world of ICOs. Just a week ago, the Swiss Financial Market Supervisory Authority FINMA published their inaugural ICO guidelines; prompted by a “sharp increase in the number of ICOs” in Switzerland.
Whilst not legally binding, having an unofficial industry benchmark is welcome news for investors. Critics of ICOs have long sought issue with the fact that these startups are not legally required to disclose price-sensitive announcements and financial reports that is otherwise the standard practice of traditional publicly-listed companies.
Whilst a step in the right direction, legal requirements are far from a standalone solution that would mark an end to future ICO busts. Indeed, the infamous dot-com bubble saw nearly 5,000 internet start-ups be either acquired at a discount valuation, or cease operations entirely. Even when the economic climate is steady, a sizeable chunk of start-ups will always fail after one year – regardless of the industry.
Per CoinMarketCap, there are 1,519 extant virtual currencies. Given that the top five (by market cap) – Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH), and Litecoin (LTC) – represent over two-thirds of the collective market cap, expect hundreds more ICOs to fall by the wayside in the years ahead.
Image From Shutterstock