ICO funding has dropped to 70% in the UK
UK crypto and blockchain startups are shifting their focus back to conventional methods of raising capital as ICOs decline. ICO funding fell 71% last year to £ 200m (£ 250m) from £ 700m (£ 875m) the previous year, according to a new report.
ICO funding decreased significantly in 2019 | Source: MMC Ventures, ICObench.com, Beauhurst.com
By comparison, venture capital funding provided startups with £ 168 million ($ 210 million) in 2019, almost as much as the year before, the report said. report the venture capital company MMC Ventures. In 2017, it only raised £ 100 million this way. In total, traditional fundraising has supported emerging British crypto companies with a total of £ 525 million since 2013.
As the model of raising capital through ICOs becomes increasingly difficult, companies are returning to traditional fundraising strategies. This has led founders to focus more on the business fundamentals, says MMC Ventures.
UK crypto companies have grown rapidly over the past 12 years, with more than 2,700 companies launched since 2008, the year Bitcoin was born. But only 9% of startups raised money by selling stocks and raising money the traditional way, with the remaining 91% coming from ICOs until the ICO bubble burst in 2018.
The number of blockchain companies has grown rapidly. | Source: MMC Ventures, Beauhurst, Crunchbase, Dealroom, Tracxn.
The report says ICOs failed in the UK because the majority of users are not interested in creating lasting value. Success requires projects that build a strong infrastructure base and good business acumen. MMC Ventures said:
Although the capital is less than it was during the ICO bubble, the resources are being used more efficiently and in a more targeted manner on the underlying areas of the technology stack.
MMC Ventures predicts that funding for UK startups will slow down through 2020 and beyond due to the coronavirus crisis. But expressed optimism that the teams’ increasingly pragmatic approach to the blockchain space gives them a chance to weather this downturn.
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