Venture capital-backed startups that have raised millions of dollars from angel investors, venture capital firms and large-scale conglomerates are also starting to conduct initial coin offerings (ICOs).

In previous coverages, Cointelegraph extensively analyzed the bubble-like market of ICO and how startups have been raising hundreds of millions of dollars without actual viable products and software.

For instance, Cornell professor Emin Gun Sirer harshly criticized Bancor, one of the most successful ICOs of all time, in an analytical paper entitled “Bancor is Flawed.

Speculative ICO market

Earlier this week, sources including TechinAsia revealed that Singaporean fintech startup Everex has raised $500,000 in seed funding from Chinese industrial conglomerate Holley Group.

However, unlike most venture capital-backed startups and platforms that have actual user bases and revenue streams, Everex is in a trial phase of its Ethereum-based online payments suite.

The vast majority of ICOs in the past including EOS and Bancor, who have raised hundreds of millions of dollars within a short period of time, have also failed to demonstrate working prototype and software of their projects.

In fact, they were yet to conduct alpha testing of their software before the two projects went on to raise over $335 mln.

It is fair to describe most investments being poured into the ICO market as completely speculative as not a single ICO has secured active user bases and revenue streams.

Some of the companies that are actually close to starting stable operations and generating consistent revenues include TenX, which has already tested its multi-cryptocurrency visa debit card and is ready to ship its product.

Everex has already raised nearly $7 mln

The investment into Everex is the first early-stage investment of Holley Group, the Hangzhou-based conglomerate which operates in multiple multi-billion dollar industries including energy, pharmaceuticals and rubber manufacturing.

At this stage, Everex is merely testing its financial platform and applications with migrant workers in Myanmar and Thailand.

Still, despite not having a fully launched product and a user base, Everex have already raised nearly $7 mln, or 34,468 Ether, and is set to complete a 70,000 Ether token sale which will last until Aug. 3.

It is solely the responsibility of investors to decide whether certain ICOs and projects are legitimate or not and if their values are well established.

Not-so-smart money from investors

However, the rapidly growing ICO market has also begun to attract large amounts of not-so-smart money from investors, as noted by NomadList founder Pieter Levels:

“The Ethereum/Blockchain-based pump and dump scam: launching coins that don’t solve any problem but getting your audience to buy in. This is the fifth person who pitched this to me including Ethereum’s ex-co-founder. It’s another dark internet scam robbing people of their money.”

At the moment, it is difficult for investors to separate projects that have actual potential to become successful to projects that will struggle to sustain and scale.

For Everex, its investment partner in Holley Group should serve as a positive note for investors, as it one of the largest conglomerates in China.

But, it can be a worrying sign for the market if venture capital firms and early stage investors are funding Blockchain projects to raise even more capital through ICOs in the short term.