Many of us who have worked in the Crypto industry or a period of time, have been debating the future (if any) of the Crypto raise.
Flash back to 2017 and we were in the ‘hay-day’ of crypto raises, with even the most ‘frivolous’ of ideas being able to raise a few million. As time passed through 2018 and 2019, dying enthusiasm, twinned with regulator crackdown, saw a slowdown in the number of successful raises.
During 2020, many have proclaimed the ‘ICO’ dead. This proclamation (presumably) including the whole scale of Token Sale Offerings (such as the IEO, HTO, CTO and others). At this point I would highlight that Security Tokens are exempt from this ‘proclamation’, due to their current attraction with the market.
While I truly understand why many would feel like this. I do, however, want to share my overview of the market, contribute my side of the argument, and explain why I think this feeling of defeat needs to be lifted from this once thriving market segment.
Exchanges need new clients
In 2019 Binance made more money than Deutch Bank. Thats huge. Deutch bank is a 200 year old (YEAR) institution. That doesn’t include any of the other exchanges which make up this massive market segment. These exchanges, need new clients, they need new tokens. I agree that there is already a huge amount of tokens out there in the market, however, the more the merrier.
The Crypto market is not the FX market. We aren’t limited by the number of countries and currencies we can pair. True, legacy coins may only be limited in number (for conversion purposes) however, these exchanges will be looking to make funds. New issues are a massive part of this business plan.
Participants still exist
Those who loved the ICO didn’t disappear. True, there are less of them, but they still exist. Many of them went on to become smart, or qualified investors. A reasonable percentage also went on to become professional traders. These people still play in the market, for the right offering, they would participate.
Projects still need funding
The alternative to a standard VC or other raise is to give away a percentage of your company. Sure, there are other methods such as crowd funding, which means you may have to give away a free t-shirt or something similar. However, most people who want some serious money, actually still can look at the crypto raise. Naturally, a pure crypto raise means you can keep 100% equity within your company.
Regulators are playing ball
I look at the FCA (UK) new license for crypto companies. This is a license designed to help companies undertaking an ICO be as legally compliant as possible. Yes, there are some other laws you need to watch, however one of the worlds biggest regulators is effectively saying ‘this is ok!’.
Additionally, for those who relied upon one of the biggest SEC exemptions within the United States (Reg D) are now able to target even more people under it.
So what happened ?
What happened, in my opinion, is this market segment grew up.
People learned how to understand the industry more, regulators took a tougher stance, the free for all ended. However, what didn’t end is the market want for it. The days of raising millions of dollars for a terrible, or even a half good, idea are over.
Providing that you prepare your project correctly, with the right documents, lots of information, good road map, and solid team. There is no reason you could not raise the base funds needed in order to achieve your goal.
Written by Cal Evans