I predict that future startups will probably have a small ICO that is covered under Reg CF, and then a bigger token sale under Reg A.
A technical white paper that doesn't bs with buzzwords, or a business plan filled with marketing fluff?
Think about it. You could spend hours working on a business plan that nobody will ever read. With the ICO route, you can reach an audience like never before.
If you are serious about your endeavour, you should ideally do both.
If you proofed the technical side of your idea, it's good, but if you didn't try to see if their was a possibility to make it profitable, then you are not starting a business.
Who would invest in a business if the people responsible for it are not serious about it ?
> With the ICO route, you can reach an audience like never before.
An audience who can understand your whitepaper and what an ICO is is definitly not an audience "like never before".
You mean like this? http://infolab.stanford.edu/~backrub/google.html
I hope this shows you that I am very serious about the "idea".
But is there even a mechanism here?
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My issue with ICO's is that there is neither a mechanism (in fact it's explicitly barred by law) or even an expectation for a company that executes and becomes profitable, to "repay" the people who bought into the ICO, by repurchasing at a multiple.
In other words, if you raise $1 million on coins, the expectation is that if you use it to become a profitable company, you will not rebuy any of those coins.
In financial terms here is what is going on when you raise money for a white paper using an ICO.
You're in two markets: you're in the market of selling collectible, limited-edition playing cards with cool branding. Theoretically you don't really care about the market for them, because selling playing cards isn't the business you're "really" in. The cards don't represent shares in your company. They just happened to be called Virtual Shares Collectible Playing Cards. And you sell them because you're trying to raise money. The "cooler" your white paper, the cooler the cards. The "real" business is just branding for the collectible cards. But what happens later to the cards has no relation to your white paper / real business. They're separate entities.
Separately, you use whatever funds raised, to fund whatever you wrote about in your white paper. There is no promised or expected flow back from the second to the first thing.
It is literally illegal to do an ICO and say that if you become a profitable business, you will repurchase the coins at a 4x multiple to their ICO price. That is illegal.
So while selling collectible playing cards by branding them with a really cool white paper might be a great way to raise money -- and who knows, the market for them might stay strong for a long time -- it really has nothing to do with the financials of the business you use those funds for.
someone correct me if I'm wrong. where is the flow back from a successful business to the coins? They don't represent ownership. The business isn't rebuying them.
What does the success of the business have to do with the coins they're branding? Nothing, right?
My open source project is now receiving funding/sponsorship from a cryptocurrency company.
I had applied to Y Combinator and various incubators in my country many times over the years but was consistently rejected because VCs didn't understand what I was doing - The founders of many of these cryptocurrencies (especially the more popular ones) actually understand technology very profoundly and so I am having much more luck there. I think that some cryptocurrencies are literally 'smart money'.