As ICO funding drops, venture investments surge in blockchain sector

Funds raised by initial coin offerings have dropped this summer, with less funding raised in July than in any other month since November 2017. August projections also similarly low.

The same is not true, however, for venture funding in the blockchain and cryptocurrency sector, which year-to-date in 2018 has reached 2.8 times the total raised in all of 2017.

In July, ICOs globally raised $817.7 million, a sharp 85 percent drop from the $5.8 billion they raised the month before, according to ICO tracking website Coinschedule.com. July was the first time in seven months that ICOs cumulatively raised less than $1 billion. As of Aug. 20, ICOs have raised less than $460 million in the month.

Venture investments in blockchain and cryptocurrency companies are seeing an opposite trend. In 2018 to date, venture firms have invested $995.8 million into 59 companies in the sector worldwide, up 180 percent from $354.9 million invested into 28 companies in all of 2017, according to data from Thomson Reuters.

Unlike ICOs, the summer months have seen an increase in venture dollars flowing to blockchain projects. Month-to-date in August 2018, venture firms have invested $136.6 million into blockchain or cryptocurrency companies, up from $97.7 million in July and $67.5 million in June, according Thomson Reuters.

Among the blockchain companies to raise funding this year are Xage Security, a Palo Alto, California-based blockchain-protected security platform provider for the industrial internet of things. Xage raised $12 million in Series A funding. March Capital Partners led the round, which included GE Ventures, City Light Capital and NexStar Partners.

More recently, Axoni, a New York provider of enterprise blockchain technology, raised $32 million in Series B funding. Goldman Sachs and Nyca Partners led the round, which included Andreessen Horowitz, Digital Currency Group, F-Prime Capital and others.

But total blockchain and cryptocurrency funding from venture investors in 2018 is still a small fraction of the total funding raised through ICOs. To date, ICOs have raised more than $18 billion in 2018, more than 18 times the total amount of venture capital that has gone to the blockchain sector this year.

The list of companies to raise through an ICO includes Basis, an algorithmic central bank, which in April announced it raised $133 million in a private token sale from investors, including Bain Capital Ventures, GV, Lightspeed Venture Partners, Foundation Capital, Andreessen Horowitz, Wing Venture Capital and others.

The bulk of venture funding in the blockchain sector, or $717.8 million of the 2018 total to date, has gone to 35 U.S.-based companies.

Below are the 15 biggest venture deals with U.S.-based blockchain companies in 2018 to date.

To download a list of top blockchain venture deals this year through mid-August, click here: Top-15-U.S.-based-blockchain-deals (2018)