ICO Vs Venture Capital
If you are reading this, there is a good chance that you have an early-stage company and think about rising money. But what will be better for your company? One option is the old and familiar venture capital (VP), raising money from a group of venture capitalists, who will risk their money in exchange for company equity.
Another option - the Initial Coin Offering (ICO), raising money worldwide from anyone having Internet an enough money to buy a token. Basically, ICO is an invention allowing startups to fund themselves without any equity commitment.
It might look like ICO is a game changer. Why should one share a percent of the company if today it’s possible to rise money without it? But VC still has a few aces in its sleeve.
VC vs ICO: Goals
There are valuable things you can get from VC additional to the funding: consulting, business guidelines, scalability, connection to the industry influencers, proof of concept. If you are looking for any of that – go for VC.
If you are looking for a quick way to rise money with as much people involved as possible, if a strong community is more valuable than influential individuals - go for ICO.
VC vs ICO: Audience
The easiest way to explain the difference is to compare ICO to business to consumer sales and VC to business to business sales.
VC investors are experienced businessmen, having a lot to propose, having a lot to demand. If you have a superb idea but no demo, no white papers, no smooth pitch, no detailed roadmap - forget about VC, they will not buy it. You need to be much better prepared than in ICO case. On other hand, VC investors are much more reliable, they are willing to support your project for a long time and are not looking for a quick return on their investment.
ICO investors are everybody. From everywhere. You can get lots of money from people living on another continent. Having a working product is not necessary. Having a track record is not necessary. Nothing is. If your idea will have enough buzz, you will get your funds.
An explainer video, Youtube channel, PPC ad, podcast - whatever you choose to bring attention and spread the word.
But please note, that the nature of ICO is quick buy-sell process. So, most of the investors will look to sell the tokens for a quick profit and will drop your project if its struggling some issues without sentiments.
VC vs ICO: Requirements
VC - You need both strong staff and stuff, working product, vision, well-prepared pitch, documentation, etc. Also, once you have a deal, you need to share a part of your company (usually at least 20 percent)
ICO - there are no formal requirements for holding an ICO. You decide what and how your token holders will get in exchange for their money.
