By Matthew Sullivan, CEO of QuantmRE
The first ICO, Mastercoin, issued in July 2013. In July 2014, the newly-created Ethereum issued its own ICO, raising over $18M. By 2017, the number of ICO crowdsales had reached several hundred, raising billions of dollars in capital from investors and speculators.
Since their introduction, ICOs have been the main method of fundraising for start-up blockchain companies. They have been a popular alternative to traditional capital raising methods as they have allowed entrepreneurs to raise capital directly from the public without diluting the owner’s equity.
Another reason that many companies initially chose to launch an ICO was the (wholly incorrect) perception that tokens were not restricted to any particular jurisdiction and therefore were not subject to securities regulation.
Demand from speculators was unprecedented throughout 2017. This resulted in a significant increase in ICO launches. According to Fabric Ventures and TokenData, in 2017 over $5.6 billion was raised in token sales and by the end of the first quarter of 2018, another $7 billion was raised, with the ICO as the main means of providing capital for blockchain development projects.