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Binance IEO Coins S*!t The Bed, Market Cap Isn’t Startup Success

The peanut gallery went wild, taking every opportunity to eat projects alive as their market caps slid into the red throughout 2018. This consistent downtrend in sentiment led to even greater bleeding. Now IEOs from Binance Launchpad seem to be experiencing a similar downtrend. The graphs seem to mirror charts from numerous ICOs from the last two years.

Some examples include Everex (EVX), Salt Lending (SALT), and Aragon (ANT). These are may be considered successful projects, yet their market caps have fluctuated massively.

If Market Cap Isn’t Success For Crypto Startups, What Is?

Receiving clearance from regulators to proceed with a business model, forming lasting partnerships, and helping to shape the way business operates are three traditional methods of gauging influence and success in business.

So If Market Value Isn’t A True Measure Of Startup Success, What Is?

Several metrics are used to determine the health of a business in traditional terms. These metrics are harder to nail down with respect to crypto projects, partially due to different methods of valuation at the time of a sale.

When seeking to value crypto projects, simply performing a comparables analysis (a.k.a. Running comps) is insufficient. Comps (for startups) are already a very inaccurate science, most of the time.

It is well documented within the finance world that startup valuations are almost always wrong. ICOs are subject to this same truth and markets often take months to years to shake out before a fair value can be established. Valuing these companies in the wild based on their youthful market capitalization is often just inviting further volatility.

What Does The Market Cap Trend Mean?

All this trend means is, even some of the most reputable businesses in the world have no effective means of valuing startups. There are so many variables which impact their pricing—including whales—that few valuations ever land anywhere near their initial expectations. Some examples include King Digital Entertainment, publisher of Candy Crush Saga (16 percent loss on day one post-IPO) and Vonage (24 percent lost by close of day two post-IPO)

Last modified: September 25, 2020 8:43 PM

Matthew Proffitt

Matthew is a startup coach, full-time freelance consultant, and fractional executive. He has helped clients raise more than $100 million in the ICO space since 2016. His expertise includes marketing, community building, and executive coaching. He has a passion for knowledge and all things finance. Matthew is currently working toward his Financial Modeling and Valuation Analyst certification. Matthew is a CCN Markets contributor based in Small Town Tennessee, USA You can find Matthew on Twitter or Linkedin. Or email him directly at: mproffittfreelance@gmail.com