When it comes to growing startups and scaling businesses, there is one solution that is the perfect opportunity for both: fundraising through the ICO. Nevertheless, startups and mature corporations differ significantly with regard to their organizational structure, business strategy and capital. Since ICOs have increased in popularity over the past years, a great number of businesses have tried their hand at this method of funding. At the same time, the majority of projects fail to gain attention from investors and can’t therefore reach their targets. In this report we present a general overview of the crowdfunding campaigns across startups and well-established businesses integrating their services with blockchain platforms.
Choice of Companies
Selection Method
This report covers companies that have focused on future-oriented technologies in highly competitive environments. We have specifically selected businesses from seven market segments in order to compare their approach and ICO results. The startups and existing businesses examined in this article were selected based on several criteria. Most of them have successfully reached their ICO goals, and even those that did not do so expressed a clear intent to continue working on their projects. Beyond that, we also paid attention to such factors as their social media activity and community engagement level, the anticipated market size and the ingenuity and usefulness of their business and technical ideas. All of their ICOs were launched in Q2 and Q3 2018, while less than optimal conditions for the cryptoindustry as a whole encouraged the survival of the fittest.
Data Collection
We gathered information about ICO goals and results from official sites and social media posts of the businesses in question, as well as from rating sites [1]. The control groups in each industry were made up of companies with a rating of 3 or more that finished their ICOs in the same time period.
Lessons from the Best ICOs
Startups
By definition, startups have to begin from scratch. While they lack some of the advantages of their more established rivals, they can make up for it with greater flexibility and focus. Also, just because the company is new, doesn't mean the people in it are. All of the startups under consideration have teams that include professionals with considerable experience in their respective fields. But startups rise and fall largely on the merit of their ideas. Perhaps that is why the startups have proven more ambitious than their preexisting rivals. As can be seen in Chart 1, those ambitions were also reflected in their higher hard caps. DAV Network, which seeks to develop a decentralised logistics network covering all forms of transport, is an outstanding example. It also raised the most funds.
BonanzaKreepChart 1: Fundraising among startup companies. [2]
The second company by money raised is XTRD, which wishes to bring all cryptocurrency exchanges together on a single platform. Brickblock may seem slightly less ambitious by comparison, but its goal is to tokenise and enable trade in all sorts of assets, even though its primary focus is on real estate. Similarly, augmented reality is just a part of BoatPilot's project, which also involves assembling and presenting marine navigation data. Of course, enterprises of this type require a lot of funds, both to get started and to reach their goals. They also need more time to present results – although some of them have already begun to do so.
Established Businesses
The companies in our ranking of the most successful ICO businesses all have something in common: Generally, they have pursued narrower goals, owing in part to their already available developments and existing partnerships. Accordingly, these companies could heavily rely on their previous success and stable client base to engage investors with their new projects. Chart 2 shows Top 7 ICOs by total amount raised during the token sale. Some of the companies couldn't even reach their soft caps, but can afford to continue development thanks to their preexisting revenue streams.
In a hot real estate market, Etheera is primary known for real estate transactions provided as a Switzerland-based agency IZ Immobilien Kriens GmbH, yet it also expands its business with a blockchain solution. In face of an increasingly complex business environment, the company envisioned a one-stop solution with integrated CRM functionality and was credited with $5.2 mln. as of the closing sales date. Another segment with intense competition, the telecommunications industry faces a rapidly evolving market and as such creates the chance to develop new businesses on the intersection of communication and advertising. In this light, Birdchain represents another good example of addressing mobile marketing issues with blockchain. Having reached its hard cap targets up to the half, the company has focused on its DApp development to officially launch the application in September 2018.
BonanzaKreepChart 2: Fundraising among existing companies. [2]
Arcona has joined the group of best in class ICOs as well. The product Arcona has entered the market with relies on a set of cutting edge technologies that includes Augmented Reality and Blockchain. This has furthermore greatly increased company’s promotional progress since Arcona received several invitations to participate in international conferences related to either technology. Smart Containers is another strong example of combining different innovations in the field of logistics, where it provides a high-tech IoT-enhanced solution for shipping perishables (both food and medicine). It is now working on scaling up its existing services – SkyCell and FoodGuardians – with the help of blockchain technology used for data storage and transactions.
Fundraising in the Face of Competition
In addition to other cryptoindustry businesses, the companies being studied here face competition from several major corporations that have expressed an interest in using blockchain technology. After all, cryptocurrencies appear to have arrived as a major business trend, with great potential for many different fields. Some giants, such as Walmart, JPMorgan and Sony, have already filed patents for blockchain-based innovations, while others, like RE/MAX, began accepting cryptocurrencies as payment while pondering further uses in their spheres. FedEx already began testing blockchain logistics. One of WPP's subsidiaries has launched a cryptocurrency consulting service for businesses wishing to adapt the blockchain. Could the companies we describe here compete with them? Although larger companies have more resources and credibility, they also have less focus and agility. Moving their business to the blockchain, even in part, would be especially difficult for them. Also, most of their blockchain projects are still at a very early stage. Their more nimble smaller or newly created competitors have a unique window of opportunity in which to gain an advantage in this field. It must be added that the larger companies tend to realise this, and that some companies on both sides of the divide wish to cooperate rather than compete. For example, both DAV Network and even more so XTRD wish to include existing major industry players in their ecosystems.
BonanzaKreepChart 3: Fundraising performance of the companies compared to the control group. [2]
What about other blockchain projects in those industries? As can be seen in Chart 3, all of the fields in question, especially advertising and finance, are highly competitive, and the bear market has left new projects struggling over more limited resources. It is not surprising that both Paygine and OTPPAY struggled to raise a lot of funds in those conditions. Nonetheless, most of the projects being analyzed here have reached their goals, and some have surpassed their industry average by a large margin. They pulled through thanks to having original, yet credible ideas.
BonanzaKreepChart 4: Total goal achievement among startups and existing companies. [2]
Conclusion
Even in the middle of a cryptocurrency bear market, ICOs remain a viable way of financing a project, whether it has been launched by a newly created or a preexisting company. It is important to take those conditions into account and plan accordingly. Companies that were flexible enough to prepare for it were able to continue development after raising fewer funds than hoped, and managed to achieve most of their goals – even if some ideas had to be scrapped or delayed. Having an ambitious and clearly explained idea, especially one that touches on several fields of technological innovation at once, can count for even more than a track record. An existing company or well-known team members can add more credibility to such proposals.
Both types of companies examined in this article have their own advantages that helped them succeed. Generally speaking, startups are more free to innovate and dream big, while existing companies have more resources and less to prove, and therefore tend to be more grounded. Startups may be reluctant to limit themselves, but they would do better in the long term if they were to commit to more specific plans. Established businesses may be said to have underperformed compared to the startups, at least in the short run. To fix this, they could borrow from the startups' more transparent and active approach to self-promotion. On the whole, though, it can be seen that companies of either type that planned ahead carefully and filled a clear market niche could still prevail over disadvantageous market conditions.
[1] ICO Bench, ICO Holder, Track ICO, ICO Drops
[2] Values may vary due to the exchange rate fluctuation and data corrections provided by selected companies in a real-time modus.
This report is prepared by Bonanza Kreep. Information contained in the report is current as of the date of the publication, and may not reflect any changes which occur after the date of the publication. Any enquiries regarding this publication should be sent to Bonanza Kreep at ceo@bkreep.pro
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