The Initial Coin Offering (ICO) industry off the Blockchain is barely three years old yet it has generated so much buzz and funds within such a short period that it cannot be ignored. ICOs started getting known and becoming ‘a thing’ in 2016. It gained ground in the year 2017 where about 6 Billion dollars was raised by Blockchain Tech enterprises through token sales. This was about a 20 folds improvement on amount realized by ICOs in 2016.
In the same 2017 calendar year, companies raised less than 1 Billion dollars from traditional Venture Capital (VC) funding and the year 2018 is towing the same narrative as companies have so far raised close to 13 Billion Dollars in ICOs whiles VCs have directly invested less than a billion so far.
The ICO market and dynamics keep changing at least with every quarter. Industry players are getting better at evaluating projects as ICO investor are becoming savvier and more selective with their investment disbursements. As such it is imperative that project teams that intend to raise funds through ICOs do so with adequate preparation and much attention to detail.
The era where just a flimsy whitepaper and website was enough to conduct a successful ICO is past. The process of an ICO is now full-time as such Blockchain start-ups must bear in mind that they have to work round the clock to achieve successful token sales.
It is safe to say that as things stand, Blockchain technology companies that intend to raise funds to help with the cause of their project should consider the ICO option as a primary funding source as against traditional VCs. ICO funding despite getting more streamlined is getting even more popular with individuals and attracting more than enough disposable income and funds.
ICOs have lower barrier-to-entry or funding in comparison to traditional VCs and a good idea is enough to get funded provided that the project team does a good work at getting their word out there. It is known that real revolutionary inventions are often difficult to get off the ground due to inability or unwillingness of traditional VCs to understand and fund such ideas. ICOs have however shown several times that funding for the most abstract of ideas that have the ability to change and positively impact the world is possible. To top this, there is a growing crowd of believers who have themselves participated in ICOs and gotten appreciable returns.
Another upside for enterprises is that with ICOs, you are not parting with company shares, it is instead more or less a purchase of goodwill by investors and they can trade this goodwill in the form of crypto-tokens back for their monies plus profit or loss on exchanges as soon as the ICO tokens become tradable. This way, investors fund does not get locked up unduly for long periods, but they can get to realize Returns on Investment (ROI) in a matter of months.
From all indications, ICOs are here to stay even though it will keep transmogrifying and get with the times. VCs are not necessarily going anywhere either, but they themselves will transform and make changes to their current model – as they are already doing.