It has not been long since the 2000s Dot-com craze. Despite the eventual collapse of the financial bubble, that period had a very positive influence on the global real economy landscape: vast majority of the largest and most successful venture funds, accelerators and techno parks came to existence at that particular period and, as a result, tons of useful technologies were invented that forever changed the way we live, work, trade and do business.
Currently, we are living through another technological revolution: a rapid development of the blockchain and its widespread global implementation, which has a very similar, if not bigger impact on economics and business. One of the areas blockchain has truly revolutionized was the global investment market. It did it through introduction of the Initial Coin Offerings. ICO is a decentralized fundraising tool for startups and companies, which allows the investments to be obtained literally from everyone, who owns a crypto wallet without turning for help to traditional licensed investment institutions. For the first time in history startups all over the world can finance their ideas or services in a decentralized manner and obtain the investments they need directly from the future end customers. ICOs have proven to be a far easier and convenient way of fundraising for both investors and investees and, therefore, have become a serious competition for traditional venture funds and banks.
Every day, more and more people and organizations are getting involved with Initial Coin Offerings. The number of the projects has been growing exponentially throughout 2017 and January 2018. According to the annual reports form ICO Rating, ICO Bench and Coinschedule, starting from last January, there has been more than 800 ICO sales held, which raised more than 6 bln $ (according to some other sources the actual numbers might be significantly higher). The median amount raised by an average ICO stands at 1,7 mln $. Out of more those 800 ICO sales in 2017, at least half of the projects managed to collect more than 100000$ each.
At first sight, the figures look really good. Indeed, ICOs have proven to be a far easier and cheaper way to fundraise for a project than applying through venture funds, trying to get a business loan from a bank or going through IPO (for the larger established institutions). Recently, however, some issues arose which, if not solved, can easily bring the whole industry into a stalemate as time goes by.
The biggest problem is a rapidly growing competition, which soared ICOs preparation budgets. Just a year ago it was enough to have a vision, express it in a White Paper and make a decent-looking landing page in order to look good as a project. This was often enough to get the backing. Unfortunately, today the situation is very different: investors became more mature and now give the money only to those who have not only an idea, but also the know how to execute it. Institutional investors, business angels and recently set up crypto venture funds are beginning to join the ICO rally as well, which, inevitably, brings a lot money into the ICO game. Unfortunately, new opportunities often come along with some very important changes: before making a contribution, these types of investors, because of their professional business and investment background, focus a lot of their attention on project’s overall presentation, marketing strategy, financial model and legal documents. Only those startups, which have these sides covered, can succeed today. Serious investors choose only serious projects, while smaller investors usually follow the bigger ones.
This tendency has led to the situation when after finding out how much it would cost to launch an ICO before it has at least some chances to succeed, lots of entrepreneurs decide to turn for help to traditional venture institutions or to give up on their dreams at all. Indeed, the costs of the campaign preparation today sometimes are comparable to launching and developing expenses of the product itself. According to some researches, only consulting, marketing and legal budgets for the successful ICO projects average at 5–10% of their soft cap targets. Therefore, if you wish to raise 5000000$, today you have to get ready to waste 500000$ just to advertise your ICO, pay for the professional advice and cover your lawyer’s bill. This is not including the other expenses. It is becoming more and more obvious that the costs are getting out of control and threatening to, eventually, ruin the industry for SMEs and startups by making ICOs affordable only for rich. According to our research, last year, only in Russia more than 6000 companies failed to launch their ICOs because of the high preparation costs alone.
As ICO professionals and experienced businessmen themselves, SBC founders have realized that this is a high time to make a move and develop much-needed solution. Few months ago, the team of experienced professionals was assembled and a thorough research has been conducted in order to figure out the way to help minor entrepreneurs and the industry to resolve the ICO cost problem. As a result, SBC has developed a concept of a platform, which will drastically reduce all the expenses and, at the same time, arm thousands of potential entrepreneurs with all the necessary hi-tech quality tools and the best expertise for evaluation, preparation and further promotion of their ICO projects.
The idea is to make most of the preparation processes fully or semi-automated in order to avoid ‘manpower’ and ‘expert’ expenses. At SBC, we know that some of these services provided by various consultants are overpriced and, often, can be delivered without human involvement at all. Currently, we are developing top-notch software, which will help the entrepreneurs to quickly compose high-quality White Papers, build landing pages, generate legal documents, hold bounty campaigns etc. The expert advising costs can be easily reduced through education: at the SBC platform, we shall be providing our clients with the access to the most actual and detailed information and analytics relevant to their project needs. We will provide them with learning materials, so they will be able to better their knowledge. The platform will not only help them to launch the project but will also educate and improve their ICO related skills. In other words, SBC Platform is going to be a convenient all-in-one package solution for those, who would like to hold their ICO sale, but do not have hundred thousands of dollars to spend or are afraid to be ripped off by the ‘industry professionals’. By using our software, knowledge and expertise, we aim to bring every ICO, which shall be using our services as close as possible to the highest of the business and professional standards at reasonable prices and within a very short timeframe.
At SBC, we believe in future of the blockchain and Initial Coin Offerings investment model. We believe it has a great potential, to eventually, replace some of the ‘traditional’, often, inefficient fundraising institutions and help thousands and millions of people with bright ideas all over the world, especially in developing countries. We are confident that with our help, they will get access to investment and, therefore, develop their wonderful products transforming our world for the better. Dot-coms did their good job almost 20 years ago by promoting venture financing for small business, ICOs are here to service the needs of all the SMEs. Another leap at higher level. We, as a company, shall do everything possible to prevent the decline of the ICO industry and to ensure it will continue to service the needs of SME.
P.S: This was just a short introduction to give you an idea of what we are trying to accomplish and what we are all about. Watch this space: more details are on their way!
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*The views expressed in this article belong to the author. Bitcoin Chaser does not endorse, vet or recommend ICOs to its readers. The reader bears all the responsibility for any actions he or she takes based on the information presented in this article.