Whoa, venture capital is now being not only disrupted BUT replaced as well. This year, for the first time, ICO's (Initial Coin Offerings) have surpassed traditional venture capital investments for blockchain entrepreneurs. Yup, so far this year the score is $327M for the ICO's and $295M for the VC's. Say hello to the ever changing new world.
(Bill Taylor/CEO)
"This article highlights findings from CoinDesk Research's new Q1 2017 State of Blockchain report, expanding on ICO and VC investment in Q2.
For the first time in the technology's short history, blockchain entrepreneurs are now raising more money through initial coin offerings (ICOs) than traditional venture capital investments.
So far in 2017, blockchain entrepreneurs have raised $327m through ICO offerings, a figure that now exceeds the $295m raised through VC funding, according to CoinDesk data.
Analysis shows the development was spurred by big gains in Q2, as entrepreneurs raised $291m through ICOs, compared to just $187m in traditional funding over the same period.
Overall, the totals are a far cry from 2016, when the nascent funding mechanism accounted for less than half of the nearly $500m of venture capital invested into startups. In the first quarter of 2017, for example, ICOs raised to just under a third of entities seeking VC funding.
In the months since, however, this trend has reversed with ICO investment totals growing over 800% and soaring past venture capital funding.
The second quarter has seen less than 10 venture capital deals thus far.
More than 80% of that funding was contributed by two deals: bitcoin mining chip maker Canaan ($43.6m) and distributed ledger consortium R3 ($107m).
By comparison, more than 20 ICOs have closed thus far in the second quarter, with over 10 exceeding $10m (and numerous selling out in just seconds or with massive valuations.)