Venture capital and angel investing are so last week. Coming out of the backstretch and into the turn are ICOs (initial coin offerings) and those offerings are now eclipsing the “old” startup fund sources. Doing an ICO myself for a project I can certainly attest to this new source (and ease) of capital raise. Oh, and by the way, its HUGE around the world but the U.S. is vastly behind (what else is new). Fabulous new world.
(Bill Taylor, CEO)
While people talk about a bubble in funding for private startups, one might want to take a look at the surge in funding for cryptocurrencies first.
According to William Mougayar, a Toronto-based venture adviser and investor, funding in initial coin offerings, a means of crowdfunding the release of a new cryptocurrency, has now exceeded that of early stage venture capital funding.
“Ever since the Bancor and Gnosis ICOs kicked the door open on creativity and boldness in ICO campaigns, the appetite for ICOs has been steadily increasing,” Mougayar wrote in a posting on Startup Management. “I sensed that June was a pivotal month that may be setting the tone for the next months to come, so I spent a good part of the past several days trying to tally-up exactly how much was raised.”
Based on his research, Mougayar said more than $560 million flowed into the space in June alone. For comparison, angel and seed stage investments only see roughly $550 million invested each month on average.
A recent report from CB Insights and PricewaterhouseCoopers LLP shows that $8.7 billion flowed into Internet-related startups in the first half of 2017, and across all sectors roughly 50 percent of investment was in the seed and early stage firms, he said. So taking half of $8.7 billion, cutting it in half once again and then dividing by six to get a per month number gives you roughly $360 million, below the amount of ICO funding seen, Mougayar said….”