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RIP ICOs: Blockchain startups receive $3.9B funding the old fashioned way

VCs have made twice the amount of blockchain deals than last year

Despite 70 percent of ICOs being worth less than they initially raised, venture capital (VC) firms are still ramping up blockchain investments. Already, traditional investors have sunk $3.9 billion into new blockchain and cryptocurrency businesses in 2018.

Not only has the number of deals struck between VCs and blockchain startups effectively doubled in the past 12 months, but the average deal size has increased by $1 million, blockchain research group Diar reports.

Altogether, the $3.9 billion being funneled into blockchain and cryptocurrency startups represents a 280-percent rise on funding over the last year.

Courtesy of Diar/Pitchbook

While there is certainly a lot of money being spread across many projects – the 10 largest funding deals in the blockchain sector amounted to over $1.3 billion. Of those companies, just one has a native token.

Remember when they said ICOs would kill traditional investment structures?

Here is a list of the top 10 investment deals, in terms of equity raised. Bitmain, R3, Circle, Ledger, and Paxos have all featured predominantly in the news of late, and note the banks peppered in for good measure.

Courtesy of Diar/Pitchbook

Diar also notes that there are close to “2,000 investors who have invested in at least one blockchain company.” Of the top 50 most active VCs, approximately half exclusively fund startups within the blockchain industry.

So, while the ICO market might seem bleak – the funding hasn’t exactly disappeared – it’s just gone legit. This could be thanks to increased pressure from government regulators like the SEC.

After all, the data indicates that 79 percent of VCs investing in blockchain startups are based in the US – where ICOs are illegal.

RIP the ICO, long live the VC.

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Published October 2, 2018 — 10:02 UTC