ICO vs. VC: Which One Is Best?

ICO Vs Venture Capital

March 29, 2019

FrederikNielsen
32

Which is the better between ICO vs VC competition? One of the foremost hardships startups experience is raising capital. And to solve this problem, any business can take advantage of ICO or venture capital (VC). But which ICO vs VC goals is better for any startups?

ICO Vs. VCO Competition

So in ICO vs VCO competition, which one is better for a company? There’s the option of the old and familiar venture capital (VP) and the Initial Coin Offering (ICO).

Venture Capital or VP is raising money coming from a group of venture capitalists who will take the risk of investing their money in exchange for the company equity. The Initial Coin Offering or ICO otherwise is raising money worldwide from any person who has the internet connection and enough money to purchase a token.

With the introduction of blockchain and cryptocurrencies innovation, ICO also had been present for a couple of years. The equity capital combines raising funds from several investors and has also been visible for around several years.

The basics of ICO is that it grants startups to fund themselves without any equity obligation. So ICO could be the game changer. Picture this, why should one share a per cent of the company if, at present, it’s potential to raise money without it? But, don’t rush into things because VC still has a couple of aces with it.

But why do startup entrepreneurs consider ICO as the perfect one? Reports say that there were 5.3 billion allocations be entrepreneurs who developed hundreds of ICOs launched in 2017.

ICO Vs Venture Capital

Who can invest in ICOs?

Who Can Invest In ICOs And VCs?

One of the advantages in ICO is that nearly everyone can be an ICO financier as long as they have the internet connection and can access major cryptocurrencies like the Bitcoin (BTC) and Ethereum (ETH). In ICOs, the geographical place is never a barrier.

Furthermore, in ICO, you don’t even need a working item to attract investors as long as your concept is engaging. Another advantage of ICO is that the investment is open to both experts, knowledgeable and the unskilled or inexperienced investors.

Compared to venture capital investors who are often experiencing businesspeople, in ICO you can be an investor even when you have no business experiences. In VC, there should be a concrete and logistic plan and approach to everything.

You would require to have a superb idea, a clear demo, a prominent content on your documents, the best and well-prepared pitch, and a specific roadmap in VC. You should be an expert on your tone, so you have concrete answers to provide from potential capitalists. But the best about VC is that these investors will stick with your business for a long time and they’re not after fast money.

Where To Find ICO vs VC Audience?

First, let’s explain the difference of the ICO to the business consumer sales and VC to business to business sales. Also, it is crucial to note the pros and cons of venture capital vs ICO funding.

VC investors eagerly prefer local-based industries. Why? It lessens their need to study and understand several markets when it comes to competitors and guidelines.

But these kinds of funding commits to countless meetings and finalizing of several documents. Also, the geographical setting is also an essential factor to consider.

VC investors are seasoned businessmen. So, they have a lot to demand from your business and a lot to propose as well. When you don’t have the velvety pitch, an impressive demo, a hard-boiled but remarkable document, and realistically detailed roadmap, then forget VC because these investors will not buy it.

The best about the VC audiences are they’re more dependable and reliable. These investors will support your business for the long run and don’t expect a quick return on their capital. But these VC businesses at present are now also sighting on to the crypto sector to also take advantage of its benefits.

With ICO vs VC investors, the ICO is for everyone and from everywhere. Your business can have the potential to acquire a lot of money even from people living on another continent. You also don’t need to have a working product nor a track record of your business experience. As long as your idea has enough buzz, you will get the funds!

Take an important note that the nature of ICO is the “quick buy-sell process.” So, compared to the VC investors, the ICO investors will only stop by to sell the tokens for a quick profit. By the time they see you undertaking some issues, they will drop your venture without sentimentality.

ICO Vs Venture Capital

What do investors look at?

What Do These Investors Look At?

These investors are enthusiastic that the ICO tokens will get high on with time granting them to generate revenues when they offer them later. ICO investors search for a strong idea that they assume will be attractive as soon as the project launched.

However, VC offers startups with several essential things on top of financing. VC financiers provide the startups with company guidelines, scalability, and consulting aside from funding. It’s because VC capitalists are the experts on these aspects. More on, these capitalists offer more business connections which are beneficial for raising the adoption of a brand-new company by the already recognized firms.

But How Do We Persuade Investors?

As an entrepreneur, it’s your foremost duty to raise capital whether through ICO or equity capital. But how to convince financiers? It’s to win the trust of the investors.

Having a stable and robust concept is enough to convince the investors to put funds in your projects. How to shorten the quantity of time you will need in looking for investors lies in how attractive your idea and plan are to the potential capitalists.

Where Can ICOs Launch?

ICOs are available across the globe as long as there’s an internet connection. The ICOs capitalists also don’t care about the geographical setting of the business using the ICO. They will only think about whether the value of their tokens will increase or not. ICOs develop the possibility of organizing together both project leaders and financiers.

Conclusion

ICO vs VC competition has several pros and cons. ICOs outpaced VCs in regards to the amounts collected by startups. ICOs interrupted the traditional investment processes and provided an even effective method of raising capital, yet, it’s still early to jump into conclusion on the fate of VCs. In summary here are the pros and cons of venture capital vs ICO funding according to Cointelegraph:

VC

•    Investors Loyalty

•    Business guidelines and knowledge support

•    Building valuable connections

•    PR credit

ICO

•    Freedom, no equity required

•    No working product needed

•    No geographic limitations

•    Rapidity – no bureaucracy

Frederik Nielsen
Frederik Nielsen

I’m a freelance writer and full-time curious person. My main interests are philosophy, politics, art, culture, science, and how they’re all interlinked. When I’m not writing, I’m fronting a band, producing records, and making videos. I’m also currently working on launching a YouTube channel that will focus on culture and politics. I think blockchain technology is fascinating because of the huge potential it has to revolutionise not only the financial sector, but society as a whole.

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