Initial Coin Offerings (ICOs) have an immense impact on the world of cryptocurrencies and startup businesses. Since its launch in 2013, many businesses have recorded successes and failures due to their ICO projects.
In 2017 alone, more than 240 companies generated more than $3.5 billion from ICO tokens. Btxchange.io claims that businesses raised a total of $1.25 billion through the system. African businesses, however, only began entering the ICO mix in the latter half of 2017.
African startups are now increasingly tapping into ICOs.
It allows them to raise funds through digital currencies without having to give away any equities.
How African startups joined the ICO bubble
Despite what may be considered as a late entrance into the ICO circle by the African companies, the efforts were marked with both successes and failures. Here are three examples of the first set of companies that launched ICOs in late 2017 in Africa.
- The ICO launched by the South African company Ekasi Bucks in September 2017 failed to raise the targeted $3.7 million, ending up with only $37,000; a project regarded as a failure.
- South African property investment company ProsperiProp recorded a successful ICO launch by raising over $200,000 in December 2017, despite falling short of its target. ProsperiProp offers a platform for customers to buy into property investment portfolios using virtual currencies.
- The South African based financial technology company Wala, which is now live in Zimbabwe and Uganda, raised $1.2 million in ICO in December 2017. The Wala financial platform is built on Ethereum blockchain and is powered by the Dala utility token. The startup did not meet it’s $30 million target but this was still considered a success.
SureRemit’s strategic entrance
With these recorded successes and failures of ICOs, other startups entered the scene in early 2018. A typical example is the Nigerian remittance startup SureRemit that raised $7 million through ICO from investors scattered around more than 60 countries worldwide.
SureRemit developed a digital voucher system that makes the process of payment cheaper and easier for customers and users. Through SureRemit, immigrants from all over the globe are able to use Remit token to purchase digital vouchers that can be used to redeem goods and services directly from the local merchants at the immigrant’s destination.
Another example of a 2018 African ICO entrant is the South African startup company Gron Digital which launched its pre-ICO in January 2018. Gron Digital set out to transform the gaming and betting industry by surmounting legal issues and ensuring that the players and the industry are protected from the challenges facing gaming and betting.
In light of the results of the ICO projects launched by various startups in Africa, three factors have been identified as critical to the success of token sales on the continent: transparency, trust, and community.
The trust of the cryptocurrency community is only gained when the startups demonstrate transparency and share all the information about their business: background, challenges, goals and plans, the team, etc. The startups that followed those principles when launching their ICOs recorded considerable success, further establishing the veracity of such claims.