Despite all the controversy regarding the SEC’s intervention or Facebook’s and Google’s ban on cryptocurrency ads, the ICO market keeps growing. According to Coinschedule, 210 token sales raised about $3.9 billion in 2017. The figure has already been exceeded this year, with 163 ICOs attracting more than $5 billion in roughly three months.
Crypto investors are not the only ones to support blockchain-based startups. This year, VC investment in crypto projects is on course to surpass 2017’s tally of nearly $1 billion. Still, ICO contributors are way ahead of them, delivering at least 3.5x more funds to blockchain-adjusted companies than VC since 2017. Also, the $1 billion figure isn’t really impressive, given that available venture capital funds reached a record-breaking $121 billion last year.
There are at least two significant reasons why we can expect VC investment in crypto projects to increase steadily.
The first reason is simple: money. 50,000% returns on investment are not rare in the crypto sphere, while the average return on the S&P is only 10%. To make the comparison even more revealing, let’s look at last year’s best performing IPOs. AnaptysBio was head and shoulders above all with its 569% return. The next company in the list, Roku, performed half as well with a ROI of 280%. At the same time, the biggest ICO by returns on investment, the NXT project, generated 1,477,000% profit for its early contributors. It looks like a calculator is needed to figure out the difference between the AnaptysBio’s IPO and NXT’s ICO returns. All right, let’s use one. 2,543x is the answer.
The second reason is technology. Someone can doubt Bitcoin’s or Ethereum’s long-term prospects but it’s pointless to dispute that blockchain is one of the most disruptive technologies in decades. Given that a half of the notable tech companies conducting IPOs last year cited Amazon (NASDAQ:AMZN) as a competitor, it’s easy to conclude that traditional, non-crypto startups tend to improve existing software and services rather than offer groundbreaking innovations. On the contrary, blockchain is on the path to revolutionizing dozens of existing industries. Furthermore, it has the potential to create new economic sectors, such as a virtual items market, from scratch.
Some of the most notable U.S. mainstream institutional investors, like Andreessen Horowitz or Plug and Play, have already turned their heads and money to blockchain-adjusted projects. European VCs seem more conservative in these terms, but the trend is likely to be broken. The Luxembourg-based venture capital firm Mangrove Capital Partners has recently announced an investment in DreamTeam, the world’s first infrastructure platform and payment gateway for esports and gaming. The project has successfully conducted the first stage of its ICO, raised $6 million and is currently preparing for the second phase.
DreamTeam is the first platform launching the Blockchain User Wallets & Smart Contracts to allow esports teams to pay their players’ compensation in tokens. It also aims to improve recruitment conditions and analytics/coaching tools with the help of a reliable and secure decentralized database.
DreamTeam is the most recent addition to Mangrove’s impressive portfolio, which includes Skype and Wix.com among other successful investments. It is also the first ICO project for the VC firm.
“With his 17 years of experience in esports, Alexander Kokhanovskyy is amongst the most connected professionals in the industry. And we have immediately been impressed by his passion, his drive and deep understanding of the essential needs of the gaming ecosystem and gamers that want to develop and join competitive team plays. We are excited to work with Alexander and the DreamTeam crew in building up their esports infrastructure platform globally.In addition to providing an all-in-one solution for hundreds of millions of gamers to build, grow, manage and monetize their teams, DreamTeam has the potential to create the de-facto payment gateway for the esports industry by leveraging blockchain and smart contracts technologies. The combination of an integrated esports platform with the ease and transparency of token-based smart contracts make it probably the most powerful and scalable esports solution available globally”, stated David Waroquier, Partner at Mangrove Capital.
As one of the leading VC firms investing in early stage tech startups in Europe, Mangrove Capital Partners sets an example for other mainstream institutional investors, which are yet to invest in the disruptive blockchain technology. And we know the reasons why the example is likely to be followed.
This article appeared first on Cryptovest
