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Are ICOs Dead? Fundraising for Blockchain in 2019 (Part 2)

Samuel Webster

An insatiable hunger for disruptive technology led Sam to jump straight from his engineering degree into Mo Works’ welcoming arms. His love of a challenge means he’s often seen feeding his inventive mind with opportunities to analyse the framework of a business and grow emerging communities. Known to take time out to travel, he recently spent a spell in Berlin.

Samuel Webster
26 Feb 2019 • 6 min read

This is Part 2 of a 2 part series, titled “Are ICOs Dead? Fundraising for Blockchain in 2019”

Read the first part here.

How To Raise Into 2019


Go the Traditional Route

Traditional Angel and Venture Capitalist funding in exchange for equity is still a very viable option. In fact, many Angel Investors and VCs are looking to dip their toes in the new and exciting industry that is Blockchain/DAG/Decentralisation, but remain too wary to invest in untraditional means.

If you’re further along than just a whitepaper and some paid PhD advisors, there is a wealth of online resources around finding Angel investment as it has a long and documented history.

As an added bonus, when Angels and VCs invest in a project they tend to take an active approach in providing advice and making sure that your business has the highest chances for success. Many Angels and VCs have been through the startup process themselves and come out the other side with more knowledge and experience than the hoards of crypto-keyboard warriors demanding “more exchanges” or “when marketing?”.

If you still believe that Angel and VC funding isn’t the right move for your business, there may be other options...

Consider an STO

I wrote a piece on ten of the interesting aspects that Security Token Offerings (STOs) might bring to the table in the future. Among those were the possibility for an Equity Token Offering; a way for a business that may not be ready for a traditional IPO to take a shortcut.

By tokenizing your equity, you are effectively IPO-ing by opening up shares in your business to a wide range of investors, all hopefully without the same level of monetary and paperwork that is required for a standard IPO.

Another example of an STO could be to sell a form of revenue-distribution token, but don’t just leap into any of these without the proper research. STOs are still in untested waters, and while you could be in a good place if you’ve researched and done the due-diligence they deserve, the potential for something ending up amiss is still very real.

Rethink Your Strategy

Do you really need a token? What is so unique, so groundbreaking that you must have a token? Is your entire business model built around a token that can’t be substituted for a pre-existing solution?

Chances are that your planned token could be swapped out with a different and proven token, coin, or even just with plain old FIAT. You could save yourself the headache of token economics, development, and more by implementing something that somebody else has already gone the hard yards with, leaving you and your team to focus on other important aspects of the business. Best of all, you would still be on the cutting edge of a new and disruptive tech, as well as potentially have active support and funding from the team or community behind your chosen replacement.

Try Something Different

The ICO as we know it didn’t exist until 7 years ago. The STO likely didn’t exist until a short while after that. Who knows what could be coming next?

If there’s anything that we should have learned from the ICO golden age, it’s that new and novel solutions are always popping up, and those that capitalise on them early are rewarded. So keep your eyes, ears, and minds open.

If You’re Still Set on Running an ICO

Choose a Forward-Thinking Regulatory Environment

An issues paper was recently released by the Australian Treasury acknowledging the risks of ICOs, but also highlighting the benefit to the Australian economy that they could bring.

This is in character with Australia’s forward-thinking mindset when it comes to cryptocurrency—I’ve done a lot of research into this, and even made a nice regulatory timeline that highlights how open they are to discussion and change.

Australia isn’t the only country to be progressive. Switzerland has long been a crypto-destination, Singapore offers groundbreaking services to crypto-businesses, and countries like Belarus have low (or no) taxes coupled with a very attractive legislature.

If you are planning on running an ICO, make sure to do it in the right place. The fundraising methodology you choose will have a definite impact on whether you should consider building your business at home or going abroad.

I can’t bring this point up without this warning: the SEC (although based in the USA) tends to treat its jurisdiction as everywhere. This is because US citizens can and have been impacted by ICOs and unregistered securities everywhere in the globe. If you’re thinking of taking advantage of a particular country’s lax stance towards cryptocurrency, make sure you don’t land yourself in trouble because of this.

Make Sure Your Marketing, Brand and PR Are Up To Scratch

You’re crowdfunding, right? How is the average joe going to find out about your project?

Marketing was everything for ICOs – many an ICO managed to raise millions with little more than a whitepaper, a dream, and a great marketing team.

I’ll speak no more about this, as it’s fairly self-evident.

In Conclusion

Many (including myself) believe ICOs’ time has passed. A variety of factors are the cause of this, including:

- Bad mechanism design
- Required investor accreditation, and hence;
- The majority of tokens sold privately
- Regulations

    Things you can consider instead of an ICO:

    - Traditional funding routes
    - An STO (Equity or other)
    - Using a pre-existing token or framework
    - Coming up with the next disruptive fundraising method (Easy, I know)

      If you do decide to create a token and run an ICO:

      - Make sure your tokenomics are robust
      - Marketing, marketing, marketing
      - Do a lot of legal due diligence
      - Take advantage of legislation in forward-thinking countries

        I hope this has been valuable, and if I’ve managed to change your opinion or convince you that I have no idea what I’m talking about, send an email to samuel@moworks.com.au. I’m always open to discuss anything crypto!

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