Fundraising is extremely common when people are starting a new business, especially in the crypto industry. However, this year, Initial Exchange Offerings (IEO) are becoming less and less popular and with this, appears a question as to how crypto businesses are going to get funding in 2020. Even though large crypto companies such as Ripple and Tron are able to put millions of dollars into different crypto businesses, they can not fund all crypto startups. Hence, many startups are exploring new and less common ways of funding their ventures.
IEOs gained attention after Initial Coin Offerings (ICO) collapsed in 2018 after one of the largest crypto exchanges, Binance, began listing large IEOs on their platform. In May of 2019, eight new Initial Exchange Offerings have been launched and in the first half of the year, 1.5 billion USD has been raised through IEOs. However, from July, there has been a drastic shift and IEOs quickly faded. According to recent research, in 2019 investors lost 98 percent of the invested funds in Initial Exchange Offerings.
On the other hand, as IEOs are disappearing from the radar, Initial Public Offerings (IPO) are having a small revival. This method of fundraising has been around since the 17th century and was the way that Amazon, Apple as well as Google were funded. In 2019, IPOs returned into the crypto sphere and began outperforming Initial Coin Offerings. Considering these results, it is possible that a hybrid fundraising method for crypto businesses will appear on the market. MERJ created the first crypto Initial Public Offerings in September 2019 and World Chess had created a fundraising method of this sort for the new year.
Although IEOs are probably taking their last breaths, it is still unclear how they will be replaced. The crypto industry will fund itself in whatever possible way.