Thursday, August 10, 2017

For the first time ICOs were able to raise more money than VCs

In the last couple of months, projects that had ICOs have managed to collect the impressive amount of $1.7 billion.

Giving the Market Confidence

Since a long time now, ICOs have been attracting a lot of attention from investors, startups, entrepreneurs, and regulators. One of these regulators is the Securities and Exchange Commission (SEC), which recently published an official report, explaining its official stand on initial coin offerings. According to the official report, initial coin offerings that give tokens in exchange for money are regarded as securities and thus should be properly regulated. In the past, most projects have bypassed this ruling by simply barring U.S. citizens from participating into their ICOs. But with this new ruling by the SEC, startups can implement necessary regulatory measures and allow U.S. citizens to contribute into their ICOs.

ICOs: The New Tech Gold Rush?

ICOs: The New Tech Gold Rush?

It’s no secret that ICOs are able to attract a huge amount of money from investors worldwide. From a couple thousand dollars to hundreds of million dollars. The amount that ICOs are able to raise isn’t the only interesting aspect of them, it’s also the incredibly short timeframe in which they are able to raise that much money. A good example for this is the TenX ICO, which was able to raise the impressive amount of $34 million in 7 minutes!

Giving VCs a Run for Their Money

Giving VCs a run for their money

In the last couple of years, the amount that venture capital firms have invested in blockchain and Bitcoin related startups has steadily risen. According to a Zerohedge article, this year alone the total amount of VC investment in the blockchain space has hit the $1.7 billion mark. But in the beginning of the summer, blockchain startups were able to raise more money with ICOs than angel and seed investments from VC firms. The recent hype around ICOs has pushed many blockchain projects to raise money through their own ICOs, instead of seeking funding from angel investors and VC firms.

But what are venture capitalists supposed to do if they can’t beat ICOs? It’s simple, they join them.

Most notable example is the Tezos ICO, in which famous venture capitalist Tim Draper is involved. Many VCs see the process of fundraising through ICOs as the future of the startup scene, and many new hedge funds are popping out now that specialize on ICOs.

What are your thoughts on this ICOs gold rush? Do you think that future blockchain start-ups will choose and ICO over a VC investment? Let us know in the comments below!

Image courtesy of Pexels, Pixabay

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