Go for Token Sales over Venture Capital
Token sales and ICO’s are starting to take off as a primary method for startups to raise capital and are putting a dent into what would normally be an area for venture capital money. While blockchain technology is a fairly new concept for many, it is proving to be an excellent method for companies to get the funding they need during critical growth periods. It additionally allows for a variety of investors to be part of a company at an early stage, allowing for excellent growth potential and leaves the decision making power of the company in the company.
The main reason that token sales are advantageous over venture capital is that companies can raise money in the early stages, even before their product is launched. VC mostly requires that the product is completed before any funds are turned over, which can put a damper on development. ICO’s allow a company to raise the funds needed in order to build out their product and branding early on, which allows for more effective growth and success. Additionally, VC will take a share of the business and often have a say in what happens within the operation of the company. This can prove to be beneficial in certain cases, but often times the founders vision for the company becomes too far skewed and can derail the initial efforts of the project.
The token sale also allows smaller investors to get in on the action of a company that is appealing to them. MyBit, for example, not only draws in investors that enjoy the cryptocurrency world, but also appeals to those that believe in the development of IoT technology and those that are concerned with the growth of renewable energy resources. Normally, the ability for investors in these circles to get into a company without an ICO can often prove difficult and delayed. The ICO creates the opportunity for investors to become involved in more projects without having a VC budget.
MyBit utilized a token sale to launch their business, which focuses on the investment of IoT and the monetization of the machine-driven economy. Utilizing a token sale allowed MyBit to raise more money than was believed to be necessary without giving up a large company percentage to a VC firm. This has allowed for rapid development into the business and create a culture behind MyBit that has a strong, driven work ethic towards the common goal of bringing device driven residual income to the masses. While venture capital may have worked in this situation, it would have pushed back development time and severely hindered the growth potential that all startup businesses are looking for.
What are your thoughts in regards to ICO vs. VC? Leave your comments below.