Initial coin offering (ICO) investments have exploded in 2017, surpassing early venture capital (VC) funding for internet companies. Individual funding totals have ratcheted up throughout the year. In June, Bancor raised a then-record $153 million; today, that might be considered a disappointing haul for a high-profile crowd sale. EOS and Tezos quickly surpassed Bancor, raising $185 million and $232 million, respectively, during July. Now, the Filecoin ICO is leaving those token sales in the dust.
Filecoin is a decentralized storage network that will use the peer-to-peer InterPlanetary File System (IPFS) to secure and store data. Simply put, users can get paid to donate their unused hard drive storage space.
Prior to the ICO, Filecoin raised $52 million from venture capital firms such as Andreessen Horowitz, Union Square Ventures, the Digital Currency Group, and Sequoia Capital. These investors received a discounted price (maximum $0.75 per token) in exchange for providing strategic advice and committing to a minimum vesting period of 1 year.
Despite strong competition from other decentralized storage projects such as MaidSafe and Storj, the Filecoin ICO launched on August 10 to much fanfare. One unique–and controversial–feature of the Filecoin ICO was that to comply with SEC securities regulations, only accredited investors were allowed to contribute. Since accreditation requires a high net worth, the average investor in the cryptocurrency community was excluded.
Despite these restrictions, the crowdsale was so popular that many users had trouble accessing the website, but Filecoin still managed to confirm more than $186 million in the first hour.
Early participation was key to maximizing one’s investment because the Filecoin ICO operates on a pricing model that increases token prices with every subsequent investment. After beginning at $1, the current price of a Filecoin token is $4.96. This is nearly 7x the maximum price paid by investors in the pre-sale VC funding round.
To date, the Filecoin ICO has raised nearly $199 million. When coupled with the $52 million in VC investments, this brings Filecoin’s fundraising total to a record-setting $251 million and year-to-date ICO investments ever closer to $2 billion.
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