Over fall break this semester, I attended a blockchain conference in Santa Monica, California. BlockCon 2017 was a week-long conference where reputable people in the blockchain community spoke, discussed new crypto trends, and networked with other members of the blockchain community. I attended BlockCon’s one-day workshop called “How to do an ICO”.
So what’s an ICO?
This year, ICOs, or Initial Coin Offerings, have been all the hype in the blockchain community. One of the biggest appeals for a startup to launch an ICO is that they can bypass the traditional venture capital financing route and fundraise through the general public without having to give away equity. Startups previously had to endure multiple pitching rounds and give away ownership in their company just to get a measly $50K from some venture capitalist. Now, they are able to write a white paper (which is pretty much a business plan), set an ICO timeline, align on a fundraising target (e.g., $10M), and just watch the investments (through some cryptocurrency) roll in. Ideally.
When investors pour money into an ongoing ICO, they receive some sort of token in exchange. However, this area is still highly unregulated (even though the SEC has been stepping in and getting more involved recently). So, a big topic of concern is this idea around the token exchange. This “token” idea seems sort of like a security if you ask me. Well, possibly. There are several variations of tokens (e.g., security tokens, utility tokens, etc.). As you can imagine, security tokens undergo much more scrutiny and have to comply with various SEC laws and regulations. However, if the target investor audience for the startup is accredited investors, pursuing this route may make more sense.
Side note: here’s a quick synopsis of key differences between utility tokens and security tokens:
All of these topics were discussed at the BlockCon workshop, which was led by organizer Kurt Kumar. After we all got a better understanding of the current ICO landscape, Kurt funneled us through the critical components needed for an ICO. Our focus then remained on identifying key ICO stakeholders, including a legal team, tax advisor, code auditor, community engagement manager, PR team, internal startup team, launch page developer, and website designers. A recurring idea throughout the workshop was embodying the mindset of “outsourcing” everything. Want to write your own ERC20 code? No, outsource it. Want to do all the marketing in-house to save costs? No, find a PR manager. Need to take time to decide on your token allocation amount? Copy someone else’s — no need to reinvent the process. By the end of the day, I was so motivated to take action that I almost wanted to launch an ICO right then and there (which everyone can, by the way- there is a very low barrier to launch an ICO).
Overall, I currently see ICOs as the best way for me to enter the blockchain space given my business background. There is a high probability that the ICO hype fizzles out, especially as the SEC regulates it more and more. But in the time being, it’s still exciting, so why not pursue it?
I’ll be traveling to Miami, Florida to attend the North American Bitcoin Conference in January 2018! The North American Bitcoin Conference (NABC) is part of the World Blockchain Forum, one of the world’s largest blockchain conferences of the year. Please reach out if you’re attending as well!