Cryptocurrency is making its mark in startup investment, and startup investors and are leveraging Initial Coin Offerings (ICOs). Bitcoin (BTC) and other cryptocurrencies are continuing to increase in value and have become a mainstream currency. Initial coin offerings entice more and more startup investors looking to back the next tech unicorn with ICO cryptocurrency funding. Let’s take a closer look at ICOs and how startup founders and investors are leveraging them.
What Are Initial Coin Offerings (ICOs)?
Initial coin offerings have become strategic funding options for startup investors. It allows them to invest cryptocurrency instead of traditional funding options that give them equity in the startup. The rise of cryptocurrency popularity and value has made ICOs a more popular funding option, in comparison to crowdfunding or IPOs. In fact, tech startups can net millions using ICOs without even having a detailed business model.
ICO Funding Is A Multi-Million Dollar Funding Strategy
Block.one, a tech startup, raised over hundreds of millions using an initial coin offering. “So far, it has extracted $700 million in real money from the global public by selling tokens, called EOS, in an initial coin offering. It is by far the largest ICO ever,” said Business Insider. Millions in funding is not a rarity either. Around 93 percent of ICOs get tens of millions in funding. One draw to ICOs for startup founders and investors is that funding can be easily achieved with a simple concept and white paper.
Startup Investors ICO Interest
There has been some decline in ICO investment, since investors request more reassurances. But as we see a rise in cryptocurrency in mainstream global companies, like Microsoft and Virgin, the decline may be short lived. There are a variety of platforms that do support businesses and companies interested in cryptocurrency exchange. Companies large and small can utilise digital wallets to accept ICO funding from startup investors.
For instance, the blockchain is making business processes more efficient. Companies can send and receive payments, secure data, verify customer identities, get funding, and more. It is also a cost-effective method when compared to using traditional financial systems that take large percentages for transactions. JP Morgan launched a Bitcoin Futures investment product, and there are more than 100 cryptocurrency hedge funds and leading venture capital firms, like Andreessen Horowitz and Sequoia Capital investing via ICOs.
ICOs Are The Future Of Cryptocurrency Funding
The current ICO models that have allowed many startups to get millions in funding will evolve. In fact, many investor influencers predict that the tens of millions of ICO funding will exceed hundreds of millions in the not so distant future. The future of cryptocurrency ICO funding will be revamped with more stages and stage goals that meet the needs of investors. Large global companies will also start using digital tokens in their business systems.
Make Cryptocurrency ICOs Part of Your Investment Strategy
It seems like investors are willing to investment via ICOs, despite the slight decline of interest. Initial coin offerings will evolve to meet the needs of investors. Startup founders may need to show they can hack it first using traditional funding options, prior to using an ICO. This will make ICOs more valuable in secondary funding, but will still serve as a powerful way to network. Should an ICO be your only source of funding? Probably not, but it will definitely be profitable down the road for your startup.