By Research Team
Billionaire venture capitalist Taizo Son believes that initial coin offerings (ICOs) will one of the “greatest major methods” for startups to raise early-stage funding in the future.
Son–a serial entrepreneur who currently heads venture capital firm Mistletoe–told CNBC that he believes ICOs present investors and startups with a promising new funding model. Specifically, he appreciates that they “democratize venture financing,” allowing individuals to participate in early-stage funding along with institutional firms. As he stated:
“[ICOs are] very good because they democratize venture financing for not only professionals like venture capitalists, but also individuals can participate in exciting projects from start-ups to support.”
ICO funding approached $800 million during Q2 2017 and even surpassed early-stage venture capital funding for Internet companies, prompting some critics to allege that the crypto finance markets are in a bubble.
However, Son is one of many forward-thinking entrepreneurs who recognize the potential that ICOs have to disrupt the financial markets. Utilizing smart contracts, companies can create and sell crypto tokens that are tradable on a blockchain (primarily Ethereum). This enables startups to crowdsource early-stage funding and gives individual investors the opportunity to invest in companies before they issue public stock.
ICO tokens may be classified as either equity, asset, or utility. Equity tokens represent company shares and create the opportunity for shareholders to exercise their voting rights on a blockchain-based platform. Asset tokens enable companies to digitize and trade something that does not exist on the blockchain, such as a share in a rental property. Utility tokens provide users with access to a service the company provides and may appreciate if demand for that service increases.
As with any investment, ICOs present their own systemic risks along with their many advantages, but investors can mitigate these risks by consulting the in-depth market research reports written by the analysts at Strategic Coin.
Strategic Coin is your go-to source for cryptocurrency investment research and education. Whether you need help understanding the basics of blockchain technology or desire to read an in-depth analysis of the latest initial coin offering, Strategic Coin will provide you with the information and resources you need to understand the crypto finance industry.
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