Exchange market is highly competitive. There are many good exchanges out there, and reliable ones, such as binance, kraken bitstamp coinbase...
I really don't see too much of a reason to invest in a new created exchange, which will be riskier for users.
IEO - Initial Exchange Offerings, are not crowdfundings for launching new exchanges, they are just like ICOs, but instead of developers conducting the token sale themselves, via smart-contract, a third party (exchange) conducts it on their behalf, with things like capping contributions per user, destroying unsold tokens and so on. People believe that IEO's are less likely to be scams, because exchanges care about their reputations and check the projects that they list.
I personally believe that IEO's are not really different from ICO's, and in fact they are just rebranded ICO's with extra steps, and they have just about the same level of scammery. The difference that IEO scammers instead of running away with money after a few months will just fake activity, tweeting that they work hard and soon the project will moon, while their useless token goes to zero.
I think you are completely right here. There are quite a few people expecting that IEO is something special where the project is "approved" and they will make a big profit. The reality is much harder. After the team has raised funds the project might turn into a big nightmare. A funding on an exchange doesn't improve the skills of the team.
The devs haven't even to be dishonest, it's always possible that they experience big issues when they realize that their idea is not so easy to realize how they expected.
IEOs are only ensuring to weed out the blatant scams where the team is fake, involved in fraud before or other red flags which an halfways experienced person should spot easily on his own.
In the German section two projects were very famous last year, Savedroid and Envion. Both collected a big amount of money. Savedroid (crypto saving app) collected over 40M $ and Envion (mining containers) collected over 100M $. Both of them failed badly, I didn't follow them closely but as far as I know Envion is close to be a scam where the founder tried to do some shady practices. At least the project is failed.
Savedroid isn't a scam but the team is completely out of their mind and think they can run the company like a local kebab shop. They have made an April fool after their funding to simulate an exit scam because they thought it's a cool marketing strategy to get attention.
NOT
In both cases the company would have had no problems to get approved for an IEO, the team is known, the expectations are big, everything is fine for an approval by big exchanges like Binance. The issues happened after the funding and that's why IEOs often have no advantages to ICOs.