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Pre-product Initial Coin Offering ICO Rapidly Killing Smaller Companies

February 1, 2018
First published on:January 29, 2018
by Frank Fancher

An Initial Coin Offering, also commonly referred to as an ICO, is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It’s somewhat similar to an Initial Public Offering (IPO) in which investors purchase shares of a company. Sounds good right? Let's try to think about it once again!

 ICO phenomenon which recently collected $4.6 billion according to a PwC report, at least 438 ICOs took place in 2017, people hugely engaged with the ICO were all starters with no product yet. So, despite having sites like Kickstarter people are going crazy over ICOs but is it a smart move for pre-product startups?

Pros and Cons of ICO Explained

ICO offers an enormous value proposition for a pre-product founder without giving away any of your company right to investors and you at the same time have freedom from Virtual Capital (VC) hazards. Sounds like you are pretty much interested in ICO generation and are probably thinking that it is a better option over regular starter programs that you might have heard of. As about 30 percent of startup post-mortems have submitted the reports which have shown their efficiency curve rapidly running downhill.

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But holding an ICO can be incredibly harmful because it means inviting the general public to take part in the company. Let's see why?

Now, you might be thinking, Once you create a community, you are all set and ICO that you hold should do the job but you have to maintain the community posting constant updates, holding a Q&A sessions, and managing the forums. Which means you need to spend more time and manpower on it but this is a huge hassle and early-stage startups can’t usually afford those.

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So, you want an unjustified amount of capital to develop your product, "Beware", because your whole program may hit rock-bottom so an Initial Public Offering (IPO) is always the best way to get your project up-and-running as investors purchase shares of a company and you can divide or sell share as per the requirement.

Also read: Five facts you need to know about Bitcoins, Know it's value, use, first purchase, pizza, owner

So, it is always good for those companies who have their hands-on experience with the ICOs. Finding product-market-fit, and calculating the needed tokens along with managing people to manage forums are Rapidly Killing Smaller Companies who have opted out to ICOs.



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