Entrepreneurship is not for the faint of heart — ask anyone who has ever launched a business. Finding the resources and capital to bring an idea to life requires blood, sweat, tears and hearing the word “no” a lot.
And then, for those who find success in the launch stage, what comes next is an endless cycle of marketing, product development, team management, and general day-to-day operations.
But once you have that flow down, you’ll inevitably have to find new ways to grow as a business because, thanks to technology, every vertical is constantly changing and customer demands are always shifting.
Leading a company through all of these tasks is daunting, but for those who aren’t intimidated, the life of an entrepreneur can be incredibly fulfilling.
Not only do you get to be your own boss, but you also get the personal satisfaction of transforming an idea into a tangible product or service that positively impacts people’s daily lives.
Despite more transparency around the hardships of launching and running a business, the entrepreneurial lifestyle has not lost any of its luster.
And now, thanks to new technology and fundraising mechanisms, there are more avenues available to lead people to their business-owning dreams.
One of the external factors shifting the entrepreneurial growth process is cryptocurrency. The onset of digital coins has opened up a new world of financing opportunities.
Previously, business owners were relegated to four primary options when it came to finding cash for their companies: borrowing from a bank, bootstrapping on their own, appealing to Angel investors, or obtaining VC funding.
For those unfamiliar with the acronym, ICO stands for Initial COin Offering. Investopedia defines an Initial Coin Offering as:
An unregulated means by which funds are raised for a new cryptocurrency venture. An initial coin offering is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists and banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange…for other cryptocurrencies.
While launching an ICO is a great option for new organizations running coin-based, decentralized solutions, it’s not for everyone.
To help hopeful entrepreneurs make the best fundraising decision for their organizations, the list below offers a brief rundown of the pros and cons of ICOs.
ICOs are fast. It can take years to complete VC fundraising rounds. But, in theory, an organizations can set their own ICO timelines.
However, if you want to set your company for the greatest amount of success possible, it’s recommended that you give yourself enough lead, or pre-sale time, to build your community and get on the radar of investors.
While ICOs have been touted as the antithesis to highly regulated traditional fundraising, this description is misleading.
Cryptocurrency regulation is a hot-button topic, and something the SEC is surveying carefully. In fact, the SEC has begun prosecuting ICOs that are not in compliance with their Know Your Customer (KYC) rules.
There are no geographic limitations. Developers and startup entrepreneurs from all corners of the globe can launch a coin offering and connect with interested investors.
In the VC world, investors typically enjoy proximity, or at least face-to-face encounters, if they’re going to be financially backing and offering their consulting services to a growing company.
Typically, to get an investor’s attention, organizations have to be able to present a working model of a product. While a working product and proof-of-concept is still preferred in the ICO world, it is not always necessary.
Many organizations launch ICOs and obtain investor funds by creating a strong white paper that discusses the market need, team history, and the specifications of how the product will work.
While there are many positives, there are also facets that dissuade entrepreneurs from running ICOs.
For starters, the competition is stiff and the market is flooded with new organizations launching their own tokens and entering into pre-sales. Additionally, many people are skeptical of ICOs in general due to some coin offerings that turned out to be scams.
So in many cases, companies may have to work extra hard to prove their purpose and long term viability.
Scrutiny around ICOs is also increasing — although this is largely a good thing as it will weed out any bad eggs. Surveying an ICO ratings site sheds some light on the analysis investors, advisors, and ICO consultants run on upcoming projects and token sales.
ICOs are strong fundraising options, but before making the decision to go this route, it’s important for entrepreneurs to arm themselves with as much information about the market and competitive token sales as possible.