![]() ![]() But the main and most important issue is how, in many cases before, banks have been substituted by VC's, and how VC's can now be disrupted and disintermediated by the ICO framework, a model where startups offer tokens that, at the end of the day, represent promises of future shares or rights of the future business. There is a lot to discuss about how ICO's are changing the ecosystem for funding. ICO's are often used to fund the development of new cryptocurrencies, but also any new project based on Blockchain. ![]() Next step was offering future shares in that same crypto, and the final move was the recent token democratization. With Blockchain and frictionless payment systems, that is possible - and this creates a new world of crowdsourcing possibilities.Īfter that first period (from 2013), where startups offered investors units of a new cryptocurrency in exchange for main crypto like Ether or Bitcoin, things evolved fast. Today, regular ECommerce sites cannot charge values like 5 cents for a particular service, because payment systems depend on structured networks that charge a fixed amount that overpasses that value. Unlike normal funding, micro funding typically occurs in a peer to peer environment, in a way not possible without the crypto world and Blockchain technology. New cryptocurrencies started to request funds for their projects, from future users, in a crowdsourced way, and, in most cases, used that same money to create them. First, it was about the traditional ICO (Initial Coin Offering). With Blockchain and the cryptocurrencies a new era of fundraising has emerged. With the new Dapps and Smart Contracts new possibilities, all this gains a complete new dimension. The step that followed was starting to slice funding into microfunding, as Seedrs and others are doing, but it still represents a very small part of project funding. In other spots not so crowded with VC's (sometimes competing between each other for the ego and the rush of the next unicorn), entrepreneurs and managers tend to focus more on real market, operations and efficiency than in fundraising. This is why those ecosystems with more funding, such as the Valley and Boston, are also the ones where more startups fail. In fact, making progress without resources is the best way to get VCs to take an interest in your company". The endgame is startups being measured by how much money they are able to raise, while it's certainly more important to question how efficiently they use that very same the capital and what value they create for the ecosystems they are in, as well as which potential for growth and real bottomline earnings exists.Īs Joseph Flaherty said once, "You don’t need venture capital to get started in most industries if you can solve a real problem for customers and charge money for it. Startups began to gain traction, mostly motivated by the desire to be the next unicorn where funds wanted to put even more money to grow even faster - but not always following or creating the best models. This change led to a vibrant new world of startups, an environment where companies such as Airbnb, Shopify, Farfetch and many others displayed a new way of thinking: come up with a good business idea with potential to change the market and then ask money from CV's, BA's and a new group of companies interested in fast growth and quick earnings (which could be valuation and not bottomline gain). The ecosystem started to change with the rise of Business Angels, Venture Capitalists and other systems involving much faster fundraising. If you had a good idea that could change everything in a particular ecosystem using technology at its heart, you would, in most cases, rely on having a family with the necessary funds. So new business, especially the one depending on technology, was a hard club for banks' financing departments. As we all know, banks tend to be slow and grey, and to avoid risks and everything they don´t understand well. Companies would fully depend on them for mostly everything, from lending money to financial services. Once upon a time, banks had the monopoly of the fundraising system. How Banks, VC´s and Business Angels are being outsmarted by a new P2P fundraising era, where ICO and tokens are the captains to take into account. ![]()
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