Research: How much money do crypto companies really need?

Editor's Note: This article comes fromCryptoglobe,authorGregory S Mathew;Compiled by Odaily Qin Xiaofeng, edited by Lu Xiaoming, please be sure to indicate the source when reprinting.

Editor's Note: This article comes from

,author

• ;Compiled by Odaily Qin Xiaofeng, edited by Lu Xiaoming, please be sure to indicate the source when reprinting.

• In this article, we will try to explain how much money the average blockchain/crypto company raises before raising another round of funding and how long these funds last.

Access to seed funding followed by other venture capital;InWara。 

Funding is raised purely through token sales such as ICO (Initial Coin Offering), STO (Securities Tokenization Offering) or IEO (Initial Exchange Offering).

Unless otherwise expressly stated, all data used in this paper are from

The Age of Blockchain and Crypto Startups"Forbes"Blockchain and encryption startups have attracted the attention of a large number of investors around the world. In just a few years, these startups have raised a whopping $46 billion to date. With such massive success, it's easy to gravitate to the great stories of the best startups.

"Forbes"

By estimating how fast these startups are burning cash, let’s try to explain: How much capital does a blockchain/crypto startup really need to survive?.

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Venture capital path

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At present, the main financing process is the seed round, A round and B round. I will calculate how much these crypto businesses have raised on average at different funding stages, and how long these funds last before raising a new round.

The data shows the average amount raised at different stages of funding: $1.94 million for a seed round, $8.8 million for a round A, and $24.8 million for a round B. On average, these startups waited 16 months between seed and Series A funding, and 25 months between Series A and Series B funding.

What about blockchain-based financing? The mechanics of ICOs and more recently IEO token sales are why these start-ups came into the spotlight in the first place.

Data shows that as much as 65% of the funds raised by blockchain and crypto startups are raised through token sale mechanisms such as ICOs, STOs and IEOs.

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Token Sale Route

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Funding raised by ICO startups

The graph above shows that as many as 47% of startups have raised less than $5 million. Fewer than 5% of companies have raised more than $50 million in funding. This suggests that primarily blockchain-based financing is being used to raise relatively small amounts of money.

secondary titleBitTorrentFrom ICO to IEO

IEOs are now very successful, such as

The sale was closed and millions were raised in minutes.

The success of the IEO model has prompted ICO projects that previously launched blockchain and cryptocurrency to launch their own IEO again to raise new funds to support their operations.

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During an ICO, blockchain and crypto startups raised an average of $11.8 million; during an IEO, an average of $8 million was raised. It is worth noting that the average interval between ICO and IEO for dozens of companies is only 3 months.

It may be shocking at first glance, but when you realize that, unlike traditional venture capital, the purpose of a token offering is not just to raise money, but to build a community for marketing, token distribution, and more. Got it.

Because, there are also some projects that are not really short of funds, and the IEO is just to create enthusiasm.

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Ethereum balance

There is one last way to measure how much money an ICO project needs - we can analyze their ETH wallet balance.