In 2017, two guys with a whitepaper could raise substantial funding through Initial Coin Offerings. As the dust settles on those days we now find over 40% of the ICOs from 2017 are already dead. As the ICO market matures, investors in ICOs demand a great deal more than just a whitepaper. They look for proven teams and substantial technology already built before they will engage.
Today, investors are still very interested in the blockchain and the ICO space. Blockchain technology will underpin the next generation of the internet and solves many of the basic issues including security, identify, and trust. Investor interest skews to the proven – as they ultimately do with every new technology.
For those running ICOs, the SEC has determined (for now) that all ICOs (regardless of their use case) are securities and must be treated as such. There are efforts to appease the SEC who looks upon tokens not for what they were intended but for how they could be used. Even if you declare your token to be a utility, the SEC will consider it a security if a user can treat it as such – i.e. sell it on an exchange for a gain.
Most ICOs are choosing a Reg D raise while some are considering Reg A+ for their fundraise. The Reg D has no limit on how much you can raise but all the investors must be accredited. The Reg A+ is limited to $50M but you can raise from anyone. One can also use Reg CF but this limits the raise to $1M so it may not make sense to use for an ICO.
The TEN ICO Syndicate consists of angels, venture capital, crypto hedge funds and others seeking blockchain-based solutions. For most of the investors the token usage is a secondary consideration. The primary care about is the team and the technology. The investors look for deals with a domain-experienced team and a substantial platform that can solve big problems and can scale.
The Emerge ICO Summit scheduled for October 10, 2018, will be a gathering of the ICO Syndicate and those raising ICO funds. To learn more please check out http://tencapital.group/txvf17/
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.