Top 4 Fundraising Takeaways From An Executive Analyses Of 1200 ICO Projects
The executive director of an analytics company called Singularex, Anton Dek, has recently written an article about the four main factors that you have to consider when you are determining how influential an ICO will be.
Singularex researched more than hundred different factors to uncover the truth of how money is raised and the company was actually able to understand that some of the main factors that influence the results are the number of Telegram members, Github stars and the Alexa ranking of the site.
For instance, the company has found a very strong correlation between how much the company has fared in these categories and how much funds it was able to get. However, it is very important to notice that these companies were still able to get funds despite not having to be good in all these aspects. Sometimes being good in only one of them is important.
The charts created by the author show that companies with a very bad Alexa ranking were able to get a lot of money while some very well positioned ones were not, so you should not look at the aspects separately but as a whole when you consider them all.
Some Important Statistics
During the year of 2017, ICOs were able to raise a total of $6.8 billion USD. When compared to the $84.2 billion USD that companies raised via venture investment money, they may be “no longer be a needle in a haystack”, as Dek affirms, but they still have a way to go.
Dek considers that less than 10% of the ICOs raised more than $50 million USD each and about 70% were able to get more than 10 million USD, but less than 50 million USD. The other ones were all less than $10 million USD. The companies that earned the most were HDAC ($258 million USD), Filecoin ($257 million USD), Tezos ($232 million USD) and Votes ($224 million USD).
We can see that the market has evolved and matured fast. A few years ago the ICOs were getting a lot less money and investors did not need to look so much when they were hoping to find out whether the company was a good bet or not. However, today this market involves such a high quantity of money that the investors have no choice but to make a thoughtful research before investing.
What Are The Main Factors That Influence An ICO?
From the data collected from the study, it was possible for the author to determine that four main factors impacted how successful a project could be. The most significant factor was how popular the website of the ICO was. The more marketing effort was put into a project, more money it would generate.
By studying the Alexa ranking of each project, Dek was able to understand that this is a good sign that people visit and know about the project. Naturally, if more people know about it, has more chances of getting money.
The second main result was Github activity. Many ICO investors are tech experts, so they pay attention to Github when they want to discover if a project is legitimate or not. If a project is popular and active on Github or other open source repositories, you can bet that it will be able to get more money.
The third factor is the percent of tokens distributed. 95% of the ICOs, according to the research, distribute over 43% to 79% of their tokens. Project that distributes less or more tokens tend to be somewhat less successful.
Finally, there is the power of the community. Not all communities are equally significant, but having one is a good idea. It was also understood that Reddit and Telegram were far more widely used than Twitter and Facebook. As the Telegram community is so popular among crypto investors, that is not a surprise. Reddit also has strong communities, while Facebook almost does not have any.
The Results Of The Research
The main surprises that the author has found was that the number of likes on Facebook or Twitter followers did not have such a big correlation with the success of a company. The influence of Bitcointalk posts and ICObench advisors was also not significant.
The four categories, however, were found to be really important for the system to work. Companies who were good in all the aspects raised more money while the ones who were not good in any of them did not. Mixed companies got mixed results, some had a good result, others did not.
However, due to the subjectivity of factors like personal influence, personal relations, agreements, innovativeness and luck were not used as parameters but they have a huge impact, too. The company affirmed that these four factors, however, were responsible for at least 40% of the success of a project.