44 % of startups/ICO still active 120 days following the end of their fundraise

[LeGaulois]

A statistic of a dataset of ~2400 ICO shows that only 44 % of the projects were still active 120 days following the end of their fundraising campaign.  On June, a study by PwC found that out of a dataset of ~3500 ICOs, “only 30 % of those have closed successfully” or “lost momentum.”
As the article below is pointing out it seems that finally, entrepreneurs are turning to traditional VC to fund their startups

Abstract

Initial coin offerings (ICOs), sales of cryptocurrency tokens to the general public, have recently been used as a source of crowdfunding for startups in the technology and blockchain industries. We create a dataset on 4,003 executed and planned ICOs, which raised a total of $12 billion in capital, nearly all since January 2017. We find evidence of significant ICO underpricing, with average returns of 179% from the ICO price to the first day’s opening market price, over a holding period that averages just 16 days. Even after imputing returns of -100% to ICOs that don’t list their tokens within 60 days and adjusting for the returns of the asset class, the representative ICO investor earns 82%. After trading begins, tokens continue to appreciate in price, generating average buy-and-hold abnormal returns of 48% in the first 30 trading days. We also study the determinants of ICO underpricing and relate cryptocurrency prices to Twitter followers and activity. While our results could be an indication of bubbles, they are also consistent with high compensation for risk for investing in unproven pre-revenue platforms through unregulated offerings.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3182169

The chart below plots the number of ICOs captured by Crunchbase which raised $25 million or morehttps://news.crunchbase.com/news/crypto-startups-pull-back-on-raising-big-icos/

[nabinkhadka]

This is such a bad news to hear but in turns what is going to happen is people will learn their lesson.  I hope good project will have luck on succeeding and providing some values to their costumers. 

[Ucy]

As the article below is pointing out it seems that finally, entrepreneurs are turning to traditional VC to fund their startups 

What kind of startups are those? Blockchain Startups or regular startups ?  This is nothing though. What matters to  Crypto World is decentralization. Private Companies don't belong here. Creating such companies is not a sustainable thing to do. We only use some because of lack of alternatives. Your have to be open source at least or respect privacy otherwise you won't last long.

[pawel7777]

How do they define whether project is active or not? It's not stated in the abstract and I don't feel like creating an account just to download the full paper. 120 days after ICO completion doesn't seem long enough to jump into conclusion that devs abandoned it and run off.

This is such a bad news to hear but in turns what is going to happen is people will learn their lesson.

? The average returns are still enormously high as compered to traditional investments. That means you could just be throwing equal amount in every ICO without any research whatsoever and still make huge profit. That's insane and cannot last.

[LeGaulois]

When you see an ICO scammed investors and disappeared, it's clear that the project isn't active anymore. (Sorry, but I was lazy to upload it somewhere to post here.)  It's both regular and related-blockchain startup. But talking about privacy there are a lot of projects that don't protect privacy somewhere in their products. How many projects aren't open source? If you still use it because you don't have alternatives then it can still be sustainable.
If a project is abandoned after 120 days it is long enough. You rarely see a team coming back suddenly and says 'Hello, we're back..."

[frowsiter]

That is a very interesting article and great study done by them. I know the study is perfect but the results are not very good for the ICO investors like us. This was already known that more than 80% of the ICO's are getting scammed but this was never known that these most o the ICO are getting inactive after the 120 days of the period. This tells us that ICO which start with full speed and great development plans are always ending up in worst ways. The timeline, how they researched it is ambiguous but to be honest this data can be trusted blindly.

The only thing we dont know yet is, why they go scam after that specific period or whether it is just the coincidence that more than 40% of them are going scam or inactive after the 120 days??

We do need more data as like, what kind of ideas are behind those ICO projects, which are team members and what is the models.

[stompix]

I have a feeling that if we expand the period to 240 days the percentage would double also.

There is a lot of ways you can keep your project 'active' by buying subscribers and posts just to keep the price of the tokens high so you can dump a lot more, on top of the already scammed investment funds.

What matters to  Crypto World is decentralization. Private Companies don't belong here.

You abandoned decentralization when you chose a project with a 'team".
That "team" and the "devs" are running the project, decentralization is dead at that point, no matter how open source is the project, they are the ones pulling the strings.

[magneto]

Is it really surprising though? I reckon that it's completely expected.

These projects are essentially made for the sole purpose of raising money. Once they've done that, most of the ICOs will just end their development or just stall with no progress being made. After all, most projects on the market right now have no purpose whatsoever and are just repeating ideas that were being done by others in the past.

They know fully that they don't care about the success of their project, even though they claimed to do so when they pitched their idea. Also, don't forget that they have no responsibilities for investors, unlike a security, because a token is only something used on their network, not a share in their company. That's why everyone needs to be careful when investing in these, or just avoid them altogether.

[BCSHonda]

This is such a bad news to hear but in turns what is going to happen is people will learn their lesson.  I hope good project will have luck on succeeding and providing some values to their costumers. 

This will be an important warning for investors. Limit risks and losses. Unfortunately for these failures.

[STT]

120 days is really not that long a time.   Its possible the ICO might take longer then this to actually produce the working business that was outlined in the original project.    I imagine it could take a year or two in some cases, that seems reasonable.

This is a statistic taken as a very rough sample for activity and maybe the most important part is about the fund raising itself, the trend being less startups with a peak matching BTC highs

[airdropwwani]

I confirmed it to look at the data related I felt increasing bad ICO project from last half year. I think the project after the ICO collapsed gradually from the latter half of last year gradually increases. Because  the result is that most of token price lower than ICO. I think the one of reason for weak market recently due to such a cheap ICO.

[hometester]

honestly, I don't know people who really make money on investments in ICO, only Bounty

[jerick06]

You can also conclude that half numbers of ICO was scam. It also gives the idea that ICO nowadays is not profitable because of its success rate and legitamacy of it.

[hatshepsut93]

They've measured activity as Twitter account activity - I've expected something like Github activity. I've seen a lot of project that turn into scams after many months, this can be explained by the fact that they use their social media and news presence to manipulate the markets of their token to get even more gains than simply exit scamming. They can get tokens by selling tokens to themselves during the ICO, so there won't be any suspicions if they were having issued tokens, and then pump the market with the news and dump their tokens.

But it's crazy how ICO's are still profitable, according to this research - even if you get scammed dozen times, one profitable ICO can cover all the losses and leave you with a profit. The market is really delusional if these startups with no product, no proof of concept manage to grow 100-200% just on tweets alone.

[jseverson]

You can also conclude that half numbers of ICO was scam. It also gives the idea that ICO nowadays is not profitable because of its success rate and legitamacy of it.

Even that number is generous. A study said that 80% of them were scams. Being active for 120 days after the end of fundraising definitely doesn't mean they're legitimate. The way the whole ICO thing is set up, it's just way too easy for the people behind them to disappear that you can never really ignore that possibility no matter how far in you are.

We don't have much data to work with, but a quick look on the graph says they've been getting less effective. I guess awareness is starting to catch up with them. I certainly hope that trend continues until only the legitimate ones are able to secure funding.

[STT]

They've measured activity as Twitter account activity - I've expected something like Github activity.

Only Github counts so they should have at least measured it but this survey is an outsiders view.    How crypto looks to them from 20,000 feet up as they pass over in their private jets.
The people with their hands dirty on the ground know what counts to make a working network and twitter does not transmit anything securely as we see constantly with the simple scams that pop up and are apparently so hard for them to put down.

The problem imo is there is not enough success and real world feedback on that.   We are still mostly in speculation and talking about possible success.   Of course projects that built solid github development would matter if they had bigger numbers, maybe it just takes time for this to be the case

[Tory-Tory]

Still need to specify in the statistics that 70% of the coins did not reach the exchange, and of those 30% who had a listing, the price on the exchange fell and did not rise above the ISO price of 80%. The figures are given without analysis from the air, just to show the whole complexity of the situation.

[LoyceMobile]

Is it really surprising though? I reckon that it's completely expected.

These projects are essentially made for the sole purpose of raising money. Once they've done that, most of the ICOs will just end their development or just stall with no progress being made.

The 44% surprised me big time, I would have expected no more than 10% to be left.
I can only assume they keep the project open for more money grabbing, either in that project or in the next ICO they started.

What I'm more curious about is how many of those 3500 ICOs and $12 billion produced anything real and worthwhile. If be surprised if it's even 10 projects.

[audaciousbeing]

Unfortunately, its a sad truth in the ICO market. I was even expecting that the percentage should be higher than that but surprised that people still trust ICOs or they are deceived in putting their money for ICOs which shows the awareness about scam ICOs is still a battle that needs to be renewed to achieve the intended result where only the serious ones get to raise funds to finance their viable projects.

The implication of this is simple, people who engage in activities like this are actually causing more harm to the entire crypto market. PWC is a reputable organisation, the population in which they are interpreting data from is representative enough (above 4000), the result even proof what active crypto followers had in mind just that they don't have the figures. It only points to the direction that, crypto cannot be trusted to flourish on its own with the micro-managing influence of people in government and that is why most of the policies that are against the real purpose of crypto go through with little or no resistance which is not speaking well for everyone.

[m.roth]

I thinks it's a great opportunity for serious businesses with real projects. The hype might be over, but there are still a lot of investors in the space looking for real and promising projects, which can be a chance to build a successful business on the long term, when u take it serious. It's not about launching an ICO and just try to make some money with sort of an idea. If you want to be successful as an ICO, you need to have a good promise, product, service and launching a token must fit with your business. One way or another, IPO's, venture capital and other fundraising methods will be digitalized sooner or later and i think tokenizing shares or securities are not bad at all.