Autonomous Research have analysed the resemblance between the dotcom bubble and the current ICO rage that is being experienced currently. The left-hand side graph depicts initially the amount of IPOs between 1997 and 2000, totalling at almost 900, which since then has dwindled down significantly. By 2005 the amount of survivors had reduced to 600 and continued to fall to 175 by 2010 and 128 by the end of 2010, equating to an 86% company failure rate. Annual share-price return for this cohort was 3.7% between 2000 and 2010.
Despite the vast majority of companies from the dotcom bubble performing extremely poorly, those who survived went on to dominate their industries. The two companies exemplified in the graph above are Amazon and Netflix, who are then contrasted with the NASDAQ composite. It can be noted that despite initial turbulence these companies went on to dominate their respective industries and performed well above the NASDAQ composite. Netflix’s market capitalisation rose from $320 million to $70 billion and Amazons grew from $429 million to $475 billion, equating to increases in market capitalisation by 225x and 1000x respectively.