Report of Ernst&Young at the ICO, called the “Edition 2017 — a year later” describes the performance and emerging business models leading ICO leaders last year. So, only 29% of 2017 ICO has developed a real product. Although this can be considered worthy
Posted on 19 October, the report is a continuation of the report in December 2017, which collected data on 372 leading projects in the sector ICO. However, the second report due to the abundance of data still focuses on TOP-110 proktah from the list.
The study was conducted in conjunction with provider of solutions for cyber security Group-IB and used data provided by the projects, as well as other available sources on the Internet.
We also recall that in the December report it was said that the ICO sector is fraught with high risk and risk of fraud. It was also reported that startups facing the ICO, provide potential investors with inaccurate information about themselves to increase investment.
It is not surprising that a new report from Ernst&Young discovered that the end of 2017, the market conditions in the sector the ICO has deteriorated, and those who have invested money in them, most likely now count the losses.
The report says that an investor who buys a portfolio of ICO class of 2017 from 1 January 2018, most likely, would have lost 66% of their investment.
Also, the analyst shows that the majority of ICO fell to a price below the original price listing. A huge 86% of all ICO 2017 are currently trading below the purchase price.
Although a small class ICO has been recognized as effective and offers a profit. Benefits “issued in 2017,” focus 10 coins. These include, in particular, Binance, Tezos, Tron and Basic Token Attention.
Ethereum continues to remain at the top of the list of top-blockchain platforms and shows no signs that would have contributed to his overthrow. By the way, Ethereum blockchain has covered more than 70% of the ICO in the survey. And this is another sign that the projects focused on blockchain infrastructure end up working better than others.
Whether the ICO startups unreliable?
Sector the ICO has long been considered an asset class ultra-high risk. The combination of low regulation and the lack of voluntary reporting from startups contributed to the unfavourable prospects for investors.
Most investment in the sector ICO was made without the presence of a real working product. In fact, the largest ICO to date, EOS has attracted an impressive four billion dollars without a minimum viable product (MVP).
Investors use a whitepaper provided to startups, to investment decisions.
So, in the report by Ernst&Young shows that most of the 110 leading performers ICO 2017 is still not prepared MVP. Less than a third of the projects were able to do it, but rather just 29 companies.
Given this, the absence of MVP is a worrying trend. It raises questions about the reliability of start-UPS and encourages them fulfill their promises to investors, because they already have the means and the law does not require them to provide anything to those who participated in the purchase of thenov. For those who call for wider rules for ICO and cryptocurrency space, this report is likely to be a strong argument.
Perspective — ICO vs venture capital
Appreciating the high level of “bounce” in ICO, a small number of startups with viable work products that need to be considered in the context of initial investments in General.
If you compare the picture in the field of ICO with venture capital investments, here also decided to invest in the early stages, when the main factor influencing the decisions of investors are speculative evaluation.
And the gaps between the amounts of early and late have steadily increased from 2012 to 2016. And despite the fact that now there is a tendency to reduce this gap, it is still large – up to 3 times.
This gap indicates a problem in the creation of commercially viable product for the money and is comparable to the success of the ICO projects. This shows that the problem of creating viable products is not exclusive to the blockchain ecosystem. And numbers ICO and venture capital investments, in principle, comparable.
If you continue statistics that 75% of U.S. startups funded by venture investors in the US, not cope with its task. This figure is higher than is generally sound. For example, the American national venture capital Association assesses the level of failures is only 25-30%. But as they say insiders, many people “bury their dead very quietly.”
And if we talk about some unwritten rules, one of them says that nine out of ten startups fail within the first five years. And it turns out that the ICO market with a high level of risk can be not so risky .