Initial Coin Offerings - cryptovalley.swiss

1 A strategic perspective Initial Coin OfferingsJune 2018 EditionAuthors:Daniel Diemers, ZurichHenri Arslanian, Hong KongGrainneMcNamara, New YorkG ntherDobrauz, ZurichLukas Wohlgemuth, ZurichIn collaboration with:Strategy& | PwCInitial Coin Offering A strategic perspectiveExecutive SummarySince our last report in Dec 2017, ICOs have gained further momentum and are emerging as a workable, alternative form of Report June 2018 Overall Situation As predicted in our Q4 2017 report, the phenomenon of Initial Coin Offerings (ICOs) has seen a small dip since Dec 2017, but is rapidly gaining traction again.

2 In the first 5 months of 2018, a total of 537 ICO s with a volume of USD bnhave been closed successfully which is more than all pre-2018 ICOs combined Since November 2017 several large scale ICOs have entered the Top 15, dwarfing previous records from 2017 with Telegram (USD bn) and EOS (USD bn), the first true ICO Unicorns have appeared The US, Switzerland and Singapore remain key global ICO hubs, however, over the past months, the UK and HK gained significant ground ICO regulation continues to emerge around the globe: many jurisdictions have issued their respective guidelines and crypto-regulation.

3 By now, three models are emerging: the US (securities-driven) Europe (balanced) Asia (binary) Strategically, ICOs continue to crowd out traditional VC funding, especially in technology and Blockchain-related startups. Hybrid models (combining classic VC/PE funding and ICO) are increasingly establishing themselves as a valid funding alternativeStrategy& | PwCInitial Coin Offering A strategic perspective0 0 1 17 161 1 2 0 21 14 28 96 16 294 548 417 872 020406080100120 Initial coin offering ( ICO , also token launch or token generation) is a term describing a limited period in which a companysells a predefined number of digital tokens (crypto coins)

4 To the public, typically in exchange for major cryptocurrencies or increasingly against FIAT are inconsistently regulated across the world, and, depending on the jurisdiction, they can take different forms including a security,utility token ordigital currency. Prospectively, ICOs are increasingly an alternativeto classic debt/ capital-funding as performed today by Venture Capital/ Private Equity firms and show must go on: within the first 5 months of 2018, more money has been raised with ICOs than in all years )Calculations based on currency exchange rates on end date of ICO.

5 As Ether and Bitcoin exchange rates are highly volatile, actual and current market capitalization of the companies today may differ significantly from figures shown in the table. ICO funding amount until considered. Source: PwC Strategy& analysis1 year EOS ICO ending in June (estimated volume)2 0001 0005 0003 00004 000 Mar-162 0941 8601 1941 108 Mar-18 Dec-17 Apr-183 560 Feb-18 May-181 656 Jan-18 May-16 Dec-16 Sep-16 Jan-177 Oct-16 Nov-16 Aug-16 Jul-16 Jun-161 0301 017 Jun-17776 Jul-17 May-17 Sep-17 Aug-17 Apr-17 Nov-178119 Feb-171 876 Jun-18 Mar-17 Oct-17 Feb-16 Jan-16 Apr-164 100 AmountVolumeUSD mnamountTelegram ICO alone accounts for USD 1,700 mnMonthly ICO number and volumeDefinition & characteristicsICO development020406080100120 Year duration/ ICO (d)

6 USD mn/ ICOT otal # ICOsTotal volume (USD mn) 552 7, YTD 53713, ,15821, Strategy& | PwCInitial Coin Offering A strategic perspectiveTelegram & EOS have introduced the era of ICO Unicorns with a record breaking USD and USD (estd.) : 15 biggest ICOs overall since 2016 Total raised amount (USD mn)1 End of ICO (month)FocusIndustryCountry1 EOS2) for decentralized appsBC infrastructureCayman for messengerSocial MediaBritish Virgin Currency for CasinosGamblingBritish Virgin for South Korean crypto platform backed by Hyundai BS&CInternet of Market for Data StorageData for decentralized appsBC open source consumer electronicsConsumer direct conversion between for the use of multiple BlockchainBC infrastructureSwitzerland12 The autonomous organizationVenture token price Blockchainfor decentralized appsBC infrastructureIsrael1)

7 Calculations based on currency exchange rates on end date of ICO. As Ether and Bitcoin exchange rates are highly volatile, actual and current market capitalization of the companies today may differ significantly from figures shown in the table. ICO funding amount until , the acclaimed USD 5bn ICO by the Maduro government of Venezuela was not considered, as the political opposition claimsthat the funds did not reach Venezuela2)EOS conducted a two-phased ICO. In the 1stphase (5 days in June 2017), USD185 mnwere raised. The second phase lasted 350 days, ending in June.

8 PwC Strategy& analysis1 Year ICONEWNEWNEWNEWNEWNEWNEWNEWNEWS trategy& | PwCInitial Coin Offering A strategic perspectiveWhile USA, CH and SGP have been clearly the main ICO hubs in 2017, countries like UK and HK are gaining ground in with most ICO tractionLeading ICO countries in 2018 (based on funding volume)CountryRaised USD mnClosedICOP lanned ICOsCayman Islands4,2541016 British Virgin Islands2,227 162 Singapore1,192 5352 USA1,092 5650UK507 4851 Switzerland456 2836 Estonia323 3140 Lithuania259 65 Israel226 55 Hong Kong223 2015 Leading ICO countries in 2017 (based on funding volume)CountryRaised USD mnClosedICO Unclosed ICOsUSA1,722 8740 Switzerland1,462 331 Singapore641 3513 Russia438 5743 China306 142UK275 2623 Japan195 66 Canada163 105 Cayman Islands162 30 USA1,722 8740 Source.

9 PwC Strategy& analysisKey Take-Aways USAremains a leading ICO destination, reinforced by clear and firm regulatory requirements ( KYC) Within Europe, Switzerland stands out as the ICO capital, but in 2018, UKhas gained terrain in terms of volume and numbers Across Asia, Singaporeis the main ICO hub, followed by Hong Kong Cayman Island and British Virgin Islands rank among top ICO countries volume-wise, as they hosted Unicorn ICOs EOS (USD ) and Telegram (USD bn) Other countries not known for being large financial markets also appear among top ICO countries ( Estonia, Lithuania, Israel) Dormant ICOs.

10 In 2017, many planned ICOs did not happen in the end or were not further publicly documented or communicatedStrategy& | PwCInitial Coin Offering A strategic perspectiveTo date, around a third of all announced ICOs have successfully closed the funding happens before and after an ICO7145383 470No ICOdates publishedAll announced ICOsPlanned in later 20181 158 Funding amount not availableor delayedClosed ICOs1 06020%Struggling with major problems10%DissolvedNo productyet65%5%Success/on track Total announced ICOs (all years)Status of top 20 closed ICOs (funding volume)Top 20 all-time ICOs by Nov 2017 were of ICOs ex-post Themajority of top funded ICO projects are on track and the product is further being developed only few have no product yet Some companies that launched ICOs struggle with major difficulties such as legal or governance issues ICO projects with smaller scale funding then the top 20 have a higher tendency to get off track or even dissolve reasons can be manifold ( legal, team, technical, product, etc.)