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"VC vs. ICO: Hot Insights from Venture Capitalists and Crypto Hedge Representatives"

On February 28, 2018, at BootUp Ventures in Menlo Park, CA, around 60 visitors, and 7 panelists attended the event. Venture capitalists and renowned blockchain experts expressed their perspectives on how blockchain solutions and VC investments interact.

One of the panelists stated, "The distributed trust ledger is novel, and will be a viable business model," which prompted a lengthy discussion. Many businesses are incorporating it into their business models, primarily because of the present buzz and lack of real added value. To succeed, you must disrupt a market by using technology to add value.

Let's take a look at some more perspectives from our featured speakers.

Taking a Quick Look at the Situation Today, startups are looking at the ICO phenomenon as a way to raise capital and attract additional investors to their ventures. Most venture capitalists, on the other hand, are wary of incorporating the ICO framework into their firms in the near future.

To entice investors, both governments and individual states in the United States are considering supporting ICOs with "soft touch" regulation. For example, in addition to Delaware, Wyoming and other states are considering setting aside a space for ICOs for tax reasons. Furthermore, Switzerland has abandoned privacy as a selling feature and is now examining ICO investments as a possible business cluster.

Future Prospects for Initial Coin Offerings

The Securities and Exchange Commission (SEC) is taking ICOs seriously and has taken legal action against a number of them, so this will be a regulated offering as policy develops. With the use of blockchain technology, businesses are striving for more automatic compliance. By recording and storing information in the blockchain network and following SEC criteria, it will assist in meeting all company regulations.

Every year, Silicon Valley invests in 2,500 businesses, yet only a small percentage of them are profitable. Crypto investors predict that this number will skyrocket in the near future.

There are ethical concerns about using blockchain transactions for payments to get over housing limitations in San Francisco and New York, for example, as a result of services like Airbnb. Because Blockchain is peer to peer, local governments are afraid that they will be unable to track these transactions.

Opinions that are diametrically opposed

“ICOs as a tool for companies to obtain financing will surpass the Jobs Act passed last year,” one participant predicted.

“More ICOs will follow the structure of the Jobs Act as their product roadmap,” said another participant.

The Reasons Why Startups Use Initial Coin Offerings (ICOs) to Fundraise

Several venture capitalists stated that businesses are using ICOs to raise funds since they are unable to raise funds from angel investors or venture capitalists. Because investment quality is lower, more investors are being sought.

There was another perspective on the concept, as not all startups follow that path. The majority of them find value in modernising their firms for increased speed and a more diverse investor and user base. There is an alternative: certified investors in private pre-sales are the safest ICO investments to make.

Some VC assumptions are impossible to disagree with: for example, if you raise money for your firm through an ICO today, it will be more difficult to raise later rounds of financing from VCs in series A, B, and C.

Is it better to do a VC or an ICO?

“People who market ICOs should be scared,” Michael Sofaer said. If you are not a licenced broker/dealer, be cautious about advertising an unregistered security.”

The following were the most useful advice from the panellists on how to launch an ICO:

  • Define all of a security offering's needs (i.e., dividends, etc.)

  • Invest in businesses rather than currencies.

  • When it comes to regulations, don't try to be clever.

  • Don't exaggerate your worth.

  • It's preferable to be cautious.

  • Read Satoshi Nakamoto's original white paper for a great example to emulate.

Thank you to the Speakers

The team is excited to work with folks that are passionate about crypto and blockchain technology. The event's passionate panelists are contemporary outstanding professionals in the sectors in which they work:

Miko Matsumura, Founder of Evercoin Exchange and BitBull Capital Venture Partner

Brian Kelly Capital Management's CTO, Michael Sofaer

Draper Nexus Ventures venture partner Salil Pradhan

Chief Engineer at Engineering Capital, Ashmeet Sidana

Fred Tanada, finance and investments at Draper Dragon Digital Assets Fund Svjatoslav Sedov, Founder of The First International Incubator

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