2016: The Year Blockchain ICOs Disrupted Venture Capital

ICOs have two primary benefits: they provide funding to the team to see the project through, and incentivize a community to contribute.

Although 2016 witnessed a high number of ICOs, they are not a new phenomenon and some ICOs from earlier than 2015 include well-known projects like ethereum, Factom, Augur, NXT and Mastercoin.

2016 saw unusually high activity in the ICO space, both in terms of total campaigns that raised money, and also in terms of the total number of investor dollars.

The notable 2016 ICOs that fell under this category were.

Another important trend that emerged in 2016 among ICOs was the creation of projects on top of existing blockchains, notably ethereum.

Several of the ICOs that raised major investment, like ICONOMI, FirstBlood and SingularDTV are projects built on ethereum.

In 2016, excluding The DAO, ethereum ICOs raised a total of $46m. The two other ICOs in early 2016, namely Lisk and Waves are coming up as new possible platforms for token issuances in the future.

Going into 2017, we expect that investors will perform more due diligence and demand a higher bar from projects that attempt to raise money via ICOs.

We have noted a few trends seen in ICOs in 2016, but there are also some broader questions that remain for the ICO space that will help the community evolve in 2017.

On the other, if ICOs start competing with traditional venture capital to fund new projects, they might want to follow a similar approach with multiple 'rounds'.