Are ICOs a Better Way for Startups to Raise Capital?

[CyberMiles]

Are Initial Coin Offerings the New and Improved Way for Startups to Raise Capital?
Understanding the supersonic rise of the ICO and what it means for businesses and investors.
https://www.inc.com/fivemiles/are-initial-coin-offerings-the-new-and-improved-way-for-startups-to-raise-capital.html

ICOs have become the darling of the investment world. In 2016, there was $256 million in new ICO funding. Less than nine months into 2017, new ICO funding to date already has topped $2 billion. In fact, not only has ICO funding surpassed venture capital funding for blockchain-based companies this year, but ICO funding actually has surpassed angel and seed-stage VC funding for all internet companies globally.

This growth has many investors, startups and consumers wondering whether to get involved, how to do it and where to get started.

Tokens and the jumpstart effect of the ICO
To invest in an ICO, buyers purchase tokens. Tokens? The best way to think of these 'tokens' is as specific amounts of digital resources that you control, and you can make payments by reassigning control of your tokens to someone else.

Two common types of tokens are usage (or utility) tokens and securities tokens. Usage tokens are not securities offerings with underlying equity and ownership. Rather, the intention of a usage token is to allow holders to access and pay for the use of a blockchain software service. (In other words, a utility token holder is often an active participant of the network.) Securities tokens provide a return on investment based on the income or valuation of some entity, like the startup itself.

The ease of crowdfunding with ICOs is a core reason for the growth in investments in ICOs. According to Dr. Yuan, "A network startup is a network of non-cooperative individuals who work together and create products and services according to certain rules, (for example, the blockchain technology's consensus engine)."

Put simply, an ICO provides an easy way to create an initial group of users who are vested in the success of the network from the beginning.

Centralized vs. decentralized network platforms
A core tenet of blockchain technology is its decentralized nature: it is governed by, created by, and maintained by an open-source community of users and service providers. (For example, the bitcoin network is maintained by "miners," who are paid bitcoins for their services in maintaining the integrity of the network.) This allows networks of individuals to collaborate and establish trust without a central authority. Because the blockchain stores ledgers across a network, where every transaction is "etched in stone," hacking or altering transactions is virtually impossible.

On the other hand, a centralized network (like banks) has many challenges that aren't seen in decentralized networks. Security and privacy, for example, become an issue with a central authority (think of the recent-;and still widening-;Equifax hacking). In addition, censorship, unfair economic distribution, and the high cost of doing business (because trust is built over time by personal relationships) all lead to a more expensive, less secure, and less trustworthy system.What an ICO looks like

What an ICO looks like
ICOs typically are organized by nonprofit organizations building network communities based on blockchain technology (thereby giving rise to the concept of "network startup"). According to Dr. Yuan, "A network startup is a network of non-corporative individuals who work together and create products and services according to certain rules (the blockchain technology's consensus protocol, for example)." For-profit companies, for their part, typically work in tandem with the nonprofit to create ICOs and, in turn, receive payments by providing software and network services.

Inevitably, the ICO, like its predecessor the IPO, will transform over time. The SEC will look at regulations for securities tokens, and the ICO market will mature. For now, there are no signs that the velocity of ICO funding growth is slowing. It may very well become the standard for the future for jumpstarting a digital business.

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Note: CyberMiles' own ICO officially begins on Nov. 21 at 9 a.m. (PST), with registration ending the previous day. Learn more about the CyberMiles ICO at cm.5miles.com.

[Eleke Leba]

There isn't a direct answer to this question. However, ICO's have turned out to be a really interesting way for startups to raise funds for their project. It is important to be cautious when investing in any ICO, the risks are high and you want to be sure you are investing in the right project.

There are a few platforms that have emerged over the last few months promising to address the pain points experienced by crypto-investors and blockchain startups, one that stood out for me is Cofound.it, you can look them up here https://www.cofound.it. Cofound.it are helping startups grow and get funding by sparking a match between them and early adopters.


Cryptoinvestors
Though, as a crypto-investor, you might want to follow the judgement of an experienced team like Cofound.it, here are a few things to look out for when investing in blockchain startups;

1. Ingenuity & market application of the product
2. Experience of the team/advisors
3. Potential profitability of the startup [not the Cryptocurrency]

Startups
For startups looking to get adequate support to scale, amongst a host of offerings, here a few things Cofound.it offers;
1. Access to funding
2. Access to early adopters who are willing to try out your blockchain integrated product
3. Advisory and mentorship

Useful link for startups;
a. Criteria for application - http://bit.do/CFI_info
b. Application portal - http://bit.do/CFI_forum

[kaloloy]

There isn't a direct answer to this question. However, ICO's have turned out to be a really interesting way for startups to raise funds for their project. It is important to be cautious when investing in any ICO, the risks are high and you want to be sure you are investing in the right project.

There are a few platforms that have emerged over the last few months promising to address the pain points experienced by crypto-investors and blockchain startups, one that stood out for me is Cofound.it, you can look them up here https://www.cofound.it. Cofound.it are helping startups grow and get funding by sparking a match between them and early adopters.


Cryptoinvestors
Though, as a crypto-investor, you might want to follow the judgement of an experienced team like Cofound.it, here are a few things to look out for when investing in blockchain startups;

1. Ingenuity & market application of the product
2. Experience of the team/advisors
3. Potential profitability of the startup [not the Cryptocurrency]

Startups
For startups looking to get adequate support to scale, amongst a host of offerings, here a few things Cofound.it offers;
1. Access to funding
2. Access to early adopters who are willing to try out your blockchain integrated product
3. Advisory and mentorship

Useful link for startups;
a. Criteria for application - http://bit.do/CFI_info
b. Application portal - http://bit.do/CFI_forum

It is up to the marketing team on how they promote their ICOs because for me I do believe that the marketing team has the most part of promoting every products and services like ICOs.
secondly, the crypto project must be a good one, I mean, those projects that are more important and more innovative over the other competitors.
also, the uniqueness and effectiveness will add good points to every projects or products.
That's how to attract investors to every ICOs.

[ZhukovM]

That's a big mistake. Many believe that the ICO is a good place for a startup of any nonsense that comes to mind. And then investors and people suffer from the fact that the developers stupidly copied someone's token, ponapisali complete nonsense that somehow crosses the cryptocurrency and their beer and the total token lying on the market at a cost of 0.000000001 cents.

[krigger]

This is just nonsense. These coins that are being thrust into the market right now is what has spoiled the crypto currency market for the real investors who really want to make money from it, imagine trying to make off with people's money and calling it a means of raising capital for a startup. That is just pure scamming people.  We need better and better cryptos in the market than the ones we are getting now.

[coins-trader]

I think nothing better has not yet been invented. Because money goes directly from investors to the company without intermediaries and other things. No interest in either direction or the other.

[Aminmon]

I also think ICO is a convenient way to raise funds.
However, there have been many fraudulent ICO projects, which is also a serious problem and requires some laws to limit it.

[quthmvpv]

I think ICO is a better way for a startup to raise money, especially for a new block chain technology company. We all know that the previous need to raise money needs your project to have a strong profitability. Many new projects have good potential but there is no initial funding that leads to no way to start the project, ICO's out. It has helped a lot of small companies grow.

[Alex_marik]

I think ICO is the best way to attract the necessary funds to implement the ideas of the crypto project. And on the other hand, it is an excellent opportunity for investors to invest at the earliest stage of a crypto project.