Later Stage Companies Shifting Their Fundraise to ICOs & Blockchain

Funding, Investing

As the ICO industry starts to mature, we’re now seeing the end of the beginning. The regulators are rushing in shutting down the scams and raising the bar for entry. Today just the legal work for an ICO costs $100K+ for the Whitepaper and reviews of the website.

ICOs are shifting into the domain of very well-funded startups and later stage firms. I receive calls from companies with substantial revenue and traction asking about ICOs as they want to skip the Venture Capital funding round because they can control the terms better.

In addition to funding, some companies are considering the advantages that come with token-based networks.  It’s not only a new way to raise funding but it is also a new way to compensate employees and offers a  new revenue growth strategy.

Some companies see potential benefits in paying employees in tokens rather than dollars as the tokens can appreciate through the growth of the network they are building. A dollar is only a dollar but a token can appreciate in value if the network it represents grows.

YourNow recently raised $24M in an ICO sale. They shifted their revenue strategy from taking a transaction fee and then having to grow the user base to issuing tokens and then making the tokens more valuable by making the network more valuable – all  without having to substantially grow the user base.

Other companies are looking at moving their technical platform to the blockchain as an alternative growth strategy. The blockchain offers clear benefits for those who adopt it. While very large companies may find it difficult to re-engineer their sites into a distributed network most growth companies can reposition their network to accommodate it.

ICOs and blockchain technology bring more than just funding –they can provide a  growth strategy and a compensation tool as well.

 

Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.

 

 


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