If you’ve ever participated in a seed funding round you will know how arduous the process is. My experience has taught me to treat them like a necessary evil rather than a helping hand. Getting your foot in the door and actually pitching to an investor is hard enough. Then, if you’re lucky, you have months of negotiating, paying costly lawyers, endless meetings, phone calls and hopefully a signed term sheet at the end.
But even at this stage, after taking up months of time and effort, I’ve seen investors walk away. No wonder then, that alternative forms of fundraising have skyrocketed in popularity in recent years.
Initial Coin Offerings have raised a cumulative total just north of $22.5 billion. For many startups, ICOs (and even STOs) provides an excellent alternative to the laborious, expensive and time-intensive venture capital funding rounds.
That being said, even multinational corporations are turning to ICOs as a preferable approach to raising capital. The relative speed and ease of an Initial Coin Offering make it a very attractive proposition. Additionally, the creation and sale of a digital token does not require the founders to give up equity in return for the money – making it even more attractive.
On a more sinister note, oppressive regimes are also launching Initial Coin Offerings in the hope of propping up otherwise failing regimes. What’s impressive here, is the variety of entities which have launched token offerings. The three biggest ICOs of all time comprises a previously unknown cryptocurrency startup, a multinational corporation and the government of Venezuela.
Clearly, ICOs are becoming popular far beyond what anyone could have been expected. The average ICO size in 2018 was $25.7 million, eclipsing the median investment size for seed companies, which is roughly $2.2 million.
With the summer of crypto love well and truly behind us, it’s time to wake up and smell the roses. Around 86% of tokens issued through an ICO are now trading below the issuance price. This is also true of most of the ones on our list.
ICOs may be proving incredibly lucrative for businesses but investors have largely suffered. Let’s take a look at the 10 biggest ICOs – by funding size – and where they are today.
Top 10 ICOs: Where Are They Now?
| Project | Funds Raised | Subscription Period | Return |
|---|---|---|---|
| EOS | $4.2bn | 25th June 2017 - 4th July 2018 | +415% (as of May 2019) |
| Telegram | $1.7bn | 15th October 2018 - 15th February 2019 | Token not available yet (as of May 2019) |
| Petro | $735m | February 2018 - March 2018 | Token not listed on independent exchanges (as of May 2019) |
| TaTaTu | $575m | 11th June 2018 - 30th June 2018 | -96% (as of May 2019) |
| Dragon | $320m | 15th February 2018 - 15th March 2018 | -97% (as of May 2019) |
| Hdac | $258m | 27th November 2017 - 23rd December 2017 | -52% (as of May 2019) |
| Filecoin | $257m | 10th August 2017 - 10th September 2017 | -52% (as of May 2019) |
| Tezos | $232m | 1st July 2017 - 14th July 2017 | -17% (as of May 2019) |
| Sirin Labs | $158m | 12th December 2017 - 26th December 2017 | -95% (as of May 2019) |
| Bancor | $153m | 12th June 2017 - 13th June 2017 | -84% (as of May 2019) |
1. EOS – The most powerful infrastructure for decentralized applications (EOS)
- Funds raised: $4.2b
- ICO subscription period: 25th June 2017 – 4th July 2018
- Return: +415% (as of May 2019).
- How it describes itself: “The most powerful infrastructure for decentralized applications”
- Notable backers: Block.one, Connect Capital.
Founded by the inimitable Dan Larimer in 2017, EOS is on a mission to provide a decentralized application layer that can perform on a global scale. As mentioned in our introduction to EOS, Larimer has a long and successful track record in cryptocurrency, building both Steemit and BitShares before turning his hand to EOS.
Regardless of the pedigree EOS undoubtedly has in its ranks, the size of its ICO is simply staggering. The $4.2 billion it managed to raise is more than the three biggest funding rounds of 2018 (Uber, Epic Games, Juul Labs) combined (!!).
This is concerning for some because it’s not clear how the parent company, Block.one, is planning to use the funds. Additionally, EOS has implemented a governance structure which crypto-luminary Nick Szabo has called “socially unscalable and a security hole.”
In EOS a few complete strangers can freeze what users thought was their money. Under the EOS protocol you must trust a "constitutional" organization comprised of people you will likely never get to know. The EOS "constitution" is socially unscalable and a security hole. https://t.co/WusEqBMGBp
— Nick Szabo ? (@NickSzabo4) June 19, 2018
Nevertheless, EOS seems to be doing very well. The mainnet launch and migration from Ethereum are complete, and the EOS token has emerged as one of the few survivors of the bear market. Sold for $1 during the ICO, the token is worth roughly five times that now (May 2019).
Besides the excellent development of the token price, it’s also worth noting the relative success of EOS’s DAPPs, which, on average, record a much higher number of users than Ethereum. So far, at least, the biggest ICO of all time is a success.
2. Telegram – Telegram Open Network (GRAM)
- Funds raised: $1.7b
- ICO subscription period: 15th October 2018 – 15th February 2019
- Return: Token not available yet (as of May 2019).
- What it is: A scalable blockchain with integrated payments and communication channels.
The story of Telegram begins with the Durov brothers – one a brilliant mathematician, and the other a serial entrepreneur with a genius for business.
In 2013, Nikolai and Pavel founded Telegram and quickly grew its user base from 100,000 to 200 million active monthly users by March 2018. Espousing strong libertarians values and harboring a passion for encryption, it is unsurprising that Pavel Durov turned his attention to blockchain technology in 2017.
Towards the end of the year, the project started to take shape and Durov published a whitepaper entitled: Telegram Open Network. Interestingly, it reads very similarly to EOS’s whitepaper and essentially aims to do the same thing: to build a secure blockchain that can handle millions of transactions per second while providing a platform for decentralized applications.
Despite this rather generic mission statement, Telegram managed to raise $1.7 billion in its private sale. In fact, the $1.7 billion surpassed the publicly stated goal of $1.2 billion, so the public sale was canceled. Telegram could have raised a lot more money but would have had to endure the attention of the SEC, and therefore decided against it.
The lack of public scrutiny has raised flags for some critics, who suggest that Telegram will not be able to follow through on the ideas proposed in the whitepaper. In fact, the whitepaper is very light on details, and a technical paper has not emerged as of yet (16th of April).
Another cause for concern is the seeming lack of transparency regarding the issuance of the GRAM tokens. These fears were supported by a Techrunch report which claimed that the ICO had become a mess. Furthermore, an article in the Coinspeaker claims that all purchasing agreements will be terminated if TON does not launch before October 2019.
Importantly, the same article states that TON is already in the private testing phase and will launch soon. As such, it is still too early to judge the world’s second-biggest ICO, but with the Durov brothers behind it, it will likely be a success.
3. Petro – A government-backed token (PETRO)
- Funds raised: $735m
- ICO subscription period: February 2018 – March 2018.
- Return: Token not listed on independent exchanges (as of May 2019).
- How it describes itself: “Sovereign cryptoasset”
- Notable backer: Venezuelan President Nicolás Maduro
The Petro ICO orchestrated by Venezuelan President Nicolas Maduro is the most sinister ICO on this list. Venezuela’s economy has been in a tailspin since the Oil Crash of 2014, essentially pulled the rug out from under its feet.
As a result, the inflation rate is projected to reach 10 million percent in 2019, and traditional lenders refuse to support the collapsing economy. With conventional means of funding out of the picture, the Venezuelan government has turned to cryptocurrency in order to provide a much-needed cash injection.
Thus the Petro ICO was born. Ostensibly backed by the country’s vast oil and mineral reserves, the Petro is designed as a stable coin which supplements the Bolivar. Due to the failing Maduro regime, complete lack of transparency and absence of meaningful accountability, the ICO was widely condemned as a scam. One commentator on Medium stated:
“The Petro is an amateur, forceful and macabre transmutation of a democratizing tool into a shitty dictatorial one. Just another insult from this narco-regime to the people of Venezuela.”
This captures the wider sentiment very well, and it is unfortunate that the third biggest ICO of all time will likely turn into a disastrous failure, with negative consequences for the people of Venezuela.
4. TaTaTu – Enjoy movies, music, videos & more for free (TTU)
- Funds raised: $575m
- ICO subscription period: 11th June 2018 – 30th June 2018
- Return: -96% (as of May 2019).
- How it describes itself: “Social entertainment on the blockchain”
- Notable backers: Polymath Capital, BlockTower Capital
At number four we have TaTaTu, and the first serious misstep for investors. With an ICO price of $0.25 per token, TTU is now (May 2019) trading at just over $0.01.
Marketing itself as a fair version of Netflix on the blockchain, Tatatu rewards viewers for watching movies, by paying them TTU tokens. This idea clearly caught the imagination of investors, because the 10 person Tatatu team suddenly found itself at the center of one of the biggest ICOs in history.
Unfortunately, it seems like the project has stalled somewhat. Competing with Netflix, Hulu, Amazon Video and (soon) Disney Plus, it’s hard to see TaTaTu carving out a meaningful slice of the pie. In this industry product is king, and the young crypto startup has struggled to list popular films on its platform.
Additionally, reports have surfaced claiming that TaTaTu has had to replace almost half of its original team. This lack of stability could be indicative of larger business failings coming further down the road.
Nevertheless, TaTaTu has clearly struck a nerve with investors and the sky really is the limit, should they improve their offering and build a real alternative to the industry heavyweights.
5. Dragon – The entertainment token (DRG)
- Funds raised: $320m
- Subscription period: 15th February 2018 – 15th March 2018
- Return: -97% (as of May 2019).
- How it describes itself: “The entertainment token”
Founded in 2017, Dragon aims to build a gambling platform with very cheap cross-border payments. Located in the British Virgin Islands, the cryptocurrency startup is specifically targeting the South East Asian market, which is why you may never have heard of it.
Interestingly, Dragon’s marketing activities are heavily focused on Motorsports; sponsoring a Formula 3 team, as well as a G-Drive team. The upshot of all this is that Dragon was perhaps the first cryptocurrency company to achieve meaningful visibility in a multi-billion dollar industry.
Unfortunately, that’s where the good news ends for investors. According to CCN, not only did Dragon work with the now toxic Cambridge Analytica during its ICO, but it is also seemingly backed by organized crime as well. This revelation should be enough to make investors run for the hills.
6. Hdac – IoT on the blockchain (HDAC)
- Funds raised: $258m
- Subscription period: 27th November 2017 – 23rd December 2017
- Return: -52% (as of May 2019).
- How it describes itself: “IoT contract & M2M transaction platform based on blockchain”
- Notable backers: Hyundai.
When the Switzerland-based IoT startup Hdac launched its ICO in 2017, it could not have foreseen the staggering success that was to come. The mostly unknown company, with no commercial products to speak of and no paying customers, managed to raise the sixth largest ICO in history.
Hdac has successfully completed its TGE on December 22nd. We would like to express our sincere gratitude to all contributors in the world.
Both the presale and the TGE have successfully finished with a total fund of $ 258 million (About 15,200 BTC).https://t.co/jE0dZntDtK— Hdac Technology AG (@hdactech) December 22, 2017
In fact, 6,200 investors bought more than 16,500 Bitcoins, raising the largest ICO of 2017, and arguably firing the starting gun for the ICO craze of early 2018. Since then, the token price has remained remarkably resilient. Impressive partnership announcements (including Hyundai) as well as the launch of its main-net, seem to have weathered the bear market storm.
For now, HDAC is still trading far below its ICO price, but that seems more like a reflection of the market situation than as an evaluation of its future prospects. With a great team, continuous progress and the first-mover advantage, HDAC investors have every right to be optimistic that this project will deliver in the long run.
7. Filecoin – A Decentralized Storage Network (FIL)
- Funds raised: $257m
- Subscription period: 10th August 2017 – 10th September 2017
- Return (futures): -52% (as of May 2019).
- How it describes itself: “A blockchain-based storage network and cryptocurrency”
- Notable backers: Sequoia, Union Square Ventures, Boost VC.
A fierce battle is raging in the cloud storage market. Projected to reach $207 billion by 2026, a plethora of blockchain-powered startups have emerged to fight Dropbox et al for the crown. Sia, Storj and most importantly, Filecoin are the main contenders.
The premise sounds promising. Storage space is becoming increasingly valuable, yet most of us have capacity to share on our local devices. Filecoin is building a sophisticated infrastructure to allow those who need storage space to rent it from those who have it – potentially reaching staggering economies of scale.
Given the attractiveness of this proposition, it’s understandable how Filecoin managed to raise a breath-taking $257 million in just one month. What’s less encouraging is the lack of significant progress.
Yes, Filecoin recently opened several repos on Github, but interested users still cannot sign up. In fact, the launch is anticipated for mid-2019; not encouraging considering that direct competitor, Sia, already offers a working solution boasting millions of downloads.
8. Tezos – Formalizing Blockchain Governance (XTZ)
- Funds raised: $232m
- Subscription period: 1st July 2017 – 14th July 2017
- Return: -17% (as of May 2019).
- How it describes itself: “A new platform for smart contracts and decentralized applications”
- Notable backers: Polychain Capital.
After five years in the cryptocurrency space, I’m still amazed by the seemingly endless drama that marauds through the industry. Tezos is a prime example, involving a married couple at the helm – Arthur and Kathleen Breitman – lengthy court-battles, and a $1 billion valuation (at the time of writing).
Despite all the distractions, Tezos is doing remarkably well. At the foundational level, it aims to provide a blockchain, which contains a native governance system. More specifically, Arthur Breitman identified the lack of flexibility in Bitcoin as a key problem – predicting the litany of hard forks which were to come.
To avoid this problem, Tezos gives developers the ability to propose protocol upgrades and request rewards for contributions without causing disruption to the network. Interestingly, Tezos utilizes the Proof of Stake consensus algorithm, allowing all token holders to vote on changes and the future development of the blockchain.
Indeed the future looks very bright for Tezos, as the project just concluded its first round of voting and both Binance and Coinbase have recently announced support for its XTZ token.
9. Sirin Labs – The Blockchain Smartphone (SRN)
- Funds raised: $158m
- Subscription period: 12th December 2017 – 26th December 2017
- Return: -95% (as of May 2019).
- How it describes itself: “Leading the crypto revolution”
Few companies have reached the dizzying heights and frightening lows of Sirin Labs. In January 2018, the market cap of the Switzerland-based consumer electronics startup peaked at a staggering $340 million. Just over 12 months later, it has shrunk to just under $17 million. Ouch.
Interestingly, Sirin is one of the few platforms on our list that has released a fully functioning product. Indeed, the secure, flagship-class smartphone with a built-in cold storage crypto wallet launched in November 2018, but sales have been disappointing.
As a result, Sirin was forced to lay off 16 of its 60 team members and reportedly fell behind on salary payments. For some, this has raised serious red flags, as the founder, controversial CEO Moshe Hogeg, has a checkered history and is reportedly being sued for alleged misappropriation of funds.
This is bad news for investors, who are also increasingly aware of the mounting competition in the space. Both HTC and Samsung have released flagship phones with in-built capacity for cryptocurrency storage and DAPP compatibility.
10. Bancor – A Decentralized Exchange And Wallet (BNT)
- Funds raised: $153m
- Subscription period: 12th June 2017 – 13th June 2017
- Return: -84% (as of May 2019).
- How it describes itself: “Redesigning the way people create and share value”
Compared to the other cryptocurrency projects on this list, it’s fair to say that Bancor has made the most progress. Designed as a decentralized exchange and wallet, Bancor is fully operational and is continuously adding new features.
According to Coinmarketcap, Bancor processes around $1 million per day, making it one of the largest decentralized exchanges in the world. Additionally, the platform uses smart contracts and smart tokens to create liquidity, lower volatility and avoid counterparty risk.
Overall, Bancor is one of the few projects in the cryptocurrency space which seems to avoid drama and instead gets on with the business at hand. Despite the recent bear market, investors have plenty of reasons to be optimistic in the long run.
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