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The Rise of the ICO, and What It Could Mean for Venture Capital

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For any ambitious startup founder, the traditional route to funding goes through angel/seed investors and then eventually to the big venture capitalists.

The sophisticated players in this funding landscape make significant amounts of dough by spotting game-changing opportunities in their early stages, and then applying their insights, connections, and experience to these startups to make them financially viable. Finally, they guide the successful company to an exit, take their returns, and then distribute to the partners.

But what if startups, especially those related to the blockchain, were able to raise money from everyone simultaneously? What if the traditional gatekeepers didn’t matter as much?

ICOs vs. Venture

Last year, it became clear that Initial Coin Offerings (ICOs) would start to challenge traditional venture capital, as funding raised through them exploded by over 20x.

Today’s infographic from Vanbex Ventures shows key statistics around this phenomenon, as well as the evolving reception from venture capital and institutional investors.

The Rise of the ICO, and What It Could Mean for Venture Capital

Needless to say, the relationship between ICOs and venture capital is a conflicted one.

On one hand, it represents the inevitable disruption of many different elements of the traditional business model. On the other hand, the ICO space is too tantalizing to ignore: cryptocurrencies are worth nearly $0.5 trillion, and those that put money in early saw returns in the quadruple digits.

Getting Onboard?

The $5.3 billion boom in ICOs in 2017 had no problems surpassing traditional early-stage venture capital for blockchain-adjacent startups, which only saw $0.95 billion in funding.

While most VCs were slow to adapt, there have been increasing signs of interest – even despite the existing regulatory concerns. In particular, the idea of additional liquidity appeals to these investors since tokens can be sold at any point. This gives an advantage over traditional models, where a liquidity event such as an IPO or acquisition is necessary.

As a result, some VCs are shifting how they work with blockchain startups. They will pre-acquire tokens prior to a public ICO, and even consult with startups to help them maximize the value of tokens and the underlying technology.

Going Institutional

The crypto asset class is also becoming more ubiquitous among institutional investors as well.

There’s such an institutional appetite to get exposure to this. It’s a half-a-trillion-dollar asset class that nobody owns. That’s a pretty wild circumstance.

– Dan Morehead, CEO and CIO of Pantera Capital

In fact, 17% of global hedge fund managers say they currently (or plan to) invest in cryptocurrency. At the same time, over 100 crypto hedge funds have popped up over the years – another sign of a widening and market landscape.

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What Would $5,000 Invested in Nvidia Be Worth Today?

Small fortunes have been made for those investing in Nvidia stock. But how much would have they earned if they bought before it skyrocketed?

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What Would $5,000 Invested in Nvidia Be Worth Today?

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Investing in Nvidia has been highly lucrative, especially for investors who got in early.

As America’s largest chipmaker, its stock price has soared given its critical role in powering AI. Last year alone, its share price jumped 272%, vaulting it into becoming one of the world’s most valuable companies.

This graphic shows how much a $5,000 investment in Nvidia would have grown over time, based on data from Yahoo Finance.

Investing in Nvidia Before the AI Boom

Below, we show how much an investment in Nvidia would have increased in value over the last several decades:

Year Invested (January 1st)Stock PriceStarting ValueValue Today (as of Feb 15, 2024)
2000$0.77$5,000$4,718,052
2010$3.85$5,000$943,610
2015$4.80$5,000$756,854
2020$59.11$5,000$61,460
2023$195.37$5,000$18,595

For those who bought in 2000, a $5,000 investment would be worth over $4.7 million today, with Nvidia’s stock price rising 94,261% over the time period.

At the time, Nvidia had just invented its graphics processing unit (GPU), which allowed computer graphics to render more seamlessly in video games and video editing. These high-performance units complete complex computing tasks, and Nvidia was creating leading technology at the time.

Over the last decade, Nvidia has increasingly focused on AI technology, with key developments launching as early as 2012. Yet it was not until 2020 when its share price really began to soar as the company’s end customer segments increasingly became data centers and cloud computing, alongside video games.

In fact, since 2020 alone, its share price has soared 1,129%—making a $5,000 investment worth twelve times as much today.

So far this year, its stock price shows no sign of stopping, driven by its outsized role in the AI chipmaking market. Roughly 70% of all chips are sold by Nvidia, outpacing key competitor AMD by a landslide.

The company’s Q4 revenues topped $22 billion, setting another historical record, amounting to a 265% year-over-year increase in revenues. In 2023, Nvidia sold 2.5 million chips with customers including OpenAI, Microsoft, Meta Platforms, and Alphabet. The price range for these chips can span anywhere from $16,000 to $100,000.

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