The ICOs, a workable alternative form of crowdfunding
The blockchain community keeps funding massively projects through ICO mechanism, and this despite a downfall felt during the second and third quarters of 2018. According to a report from the VC fund Fabric Ventures, during the first 9 months of 2018, $12.3 billion were raised on the ICO market, more than twice the 5.6 billion of 2017. Without contesting this dramatic growth of 2018 ICOs global market, it should be noticed that close to 47% of this amount comes from two major token sales: the ICO Unicorns Telegram and EOS. Thus, regardless of main criticisms surrounding ICOs, this token sale mechanism keeps attracting more and more investors. According to a June 2018 report from PWC Strategy& in association with the Crypto Valley Association, ICOs are “emerging as a workable, alternative form of crowdfunding”.
Traditional investors make their entry in the ICOs market…
As proof of that, for few months now, traditional investors (VCs, family offices, banks…) are interfering in the blockchain industry, acquiring tokens through private sales starting before ICOs. As new trend, private rounds and pre-sales are now dominant. 85% of today’s token sales use private rounds allowing to raise an average two third of the final project capital. This shift can partly be explained by pending securities regulations as in the US allowing only accredited investors to participate, but not only. Other reasons can be found in securing a stronger reputation, using the strategic network from the funds and testing the product before public sale. According to the above-mentioned PWC report, the future of funding will combine ICOs with traditional venture capital and private equity. But for now, VC funds are still divided, looking to secure more than just tokens during sales.
… but stay cautious waiting for off-chain assets
Feeling uncomfortable with a system in lack of transparency and regulations, some traditional investors are still refusing to take positions on non-regulatory offerings. They are trying to secure during private offerings the same rights than an investor in a traditional company would have, meaning shares, voting rights, dividends… This loss of traditional rights coupled with the high volatility of cryptocurrency prices is delaying the entry on ICO market from the most skittish and skeptical traditional players.
Is securities distribution really the best solution?
One solution would be to reintroduce shares distribution during the ICO process. Thereby, investors would be reinsured on what they invest in, would have the ability to discuss about the business plan orientation and would get dividends as complement of tokens value rise. But this could mean coming back to the traditional investment regulations: securities distribution making ICOs fall under securities regulations as in the US. If so, most of current blockchain projects will not be allowed by SEC, considered as non-viable enough, and most of the industry’s investors, not being accredited, won’t be allowed to participate.
The ICO.E as a relevant alternative to come
With Eqwity, a project that came to our attention, both the investors and regulators will be pleased. Currently launching its ICO, Eqwity is offering a well-thought solution: the ICO.E = Initial Coin Offering + Equity Airdropping. The principle is simple, for each utility token bought during the ICO, each investor receives a company share as a free “Thank You Gift”. As such, the investor gets “real assets” with, attached to them, a voting and dividends right. He will be able to enforce this right to vote and participate to the decision-making process thanks to Community Voice, a smart platform powered by Artificial Intelligence. Eqwity defending a real decentralized governance for private companies, the principle is fair and simple: one investor = one voice. Investors will vote for strategic decisions through organized online referendums.
First, this ICO.E fundraising platform will bring a new ICO standard to the industry, reintroducing transparency and bidirectional trust. Then Community Voice will offer the way for investors to be heard by project founders. Such a project could be an unexpected game changer leading the current skyrocketing ICO market to a mass-adopted market and industry. We are eager to follow next steps of this project. Eqwity just raised $1.1 million during its private sale. Next step: November 17th for their Pre-Sale. For more information: www.eqwity.io.