Initial coin offerings (ICO) are emerging as a viable and popular way to raise money for your business. These are similar to IPOs (initial public offerings) except that buyers are allocated digital tokens or coins in place of shares. These coins may be traded similar to how stocks are bought or sold on stock exchanges. The one major difference is that ICOs do not provide coin buyers any sort of ownership rights.
As of November 2017, more than 200 projects raised over $3.25 billion dollars over ICOs. The total value of ICOs rose seven times between 2016 and 2017 with October 2017 seeing more than $650 million raised. There is a reason why ICOs are becoming so popular among businesses looking to raise capital. The traditional VC funding model is quite restrictive in the sense that there are very few firms deciding on the fate of thousands of startups and small businesses. ICOs are crowd funded and let anybody fund the growth of businesses they are interested in. From a founder’s perspective, another reason why ICOs are so valuable is because they do not have to give up equity in exchange for the money raised. Finally, ICOs are unregulated – as a business, you may be able to secure funds from investors anywhere in the world. This is so much unlike traditional investing that have complex regulations for capital influx from outside the nation borders.