TREND/OPPORTUNITY REVIEW: My thoughts on the infamous IEO trend

Mario

Founder | CEO | Investor

About a year ago, when the IEO hype stated, I posted a few videos on https://www.linkedin.com/in/mario-nawfal/ about how I think the hype is expected to be short-lived, and the exchanges left standing will be the ones that focused on quality projects and protecting their users without pumps & dumps. Binance led the way in launching the highest quality projects, and this worked in their favor. The numbers don’t lie, their projects outperformed other exchanges. From memory Binance had about 30% of their projects get a positive return for their investors so far, which is good by any measures when you compare to average VC returns in the first year.

Now seeing this announcement today https://chainbulletin.com/binance-announces-its-first-ieo-of-2020/, it reminds me of this debate from 2019. So what materialized? Are IEOs still a valid form of fundraising, at least on quality exchanges?

From what we see, it seems shitty smaller exchanges are still scamming projects. We had a recent company with a solid ex-wall street founding team reach out to us for help. We found out one of their team members is a scammer (who scammed our company IBC in 2018-19) and another shady team member. Those individuals were trying to convince the company to pay 6-figures to list on an unknown exchange we have NEVER heard of (Biki), and looked shady to say the least. And the craziest part… they decided to go ahead with those recommendations despite all our warnings. We were flabbergasted to say the least, but this was also a reminder for us that the hype is still there (even though less than before) and projects will continue to loose money due to scams or biased/misleading advice.

TLDR: Many will continue to raise a lot of money, and many (most) will continue to loose money. Larger exchanges, in my opinion, will end up winning long term with quality IEOs being launched, however regulations play a major role in making this happen.