Fears that the mania for blockchain startups and initial coin offerings (ICOs) are a bubble will hardly be assuaged by a new report published by news site Bitcoin.com.
“Tokendata, one of the more comprehensive ICO trackers, lists 902 crowdsales which took place last year,” it explained. “Of these, 142 failed at the funding stage and a further 276 have since failed, either due to taking the money and running, or slowly fading into obscurity. This means that 46% of last year’s ICOs have already failed.”
Yet another 113 companies that ran an ICO in 2017 are classed as ‘semi-failed’ because they’ve stopped communicating on social media and/or “because their community is so small as to mean the project has no chance of success”.
Now, this isn’t the tale of scams and stolen money that some headlines insinuate it might be. Many of the ICOs raised barely any money at all (hence the failure of the companies behind them).
However, the article notes that the 531 ICOs that have either failed already or are peering down the dumper raised $233m between them.
The fact that the majority of startups ultimately fail isn’t a new trend – but in the world of traditional funding, the ‘runway’ provided by these investments at least tends to last a bit longer than a year.
Still, the study is a reminder of the most sensible strategy when looking at music-related blockchain startups: look beyond the word ‘blockchain’ and any ICO hype, and focus on the fundamentals of the product and business.