So far, the Initial Coin Offerings have collectively raised a whopping sum of 875.34 million US dollars for cryptocurrency projects. And the fact cannot be denied that a plenty of them were quite successful as well. With several entrepreneurial feats that happened due to ICOs, it would not be wrong to say that the latter is surely a trailblazer for business aspirants.
Undoubtedly, crowdfunding with ICO has become a preferred method for raising seed capital for business. But, there is a catch, recently, this medium has been used by various fraudsters who scammed millions of dollars as a whole. This has raised questions over the authenticity of ICO and certainly, the reputation of this medium has been tarnished resulting in investors avoiding such campaigns.
Having been exposed to the flipside of ICO, investors have definitely learnt that this instrument is not truly reliable. But, there’s another side which caused success to many entrepreneurs and also brought transparency into the whole process of raising funds.
Therefore, something new was needed which gives the same benefits of ICO but doesn’t fling security at stake. Security Token Offering is a solution that the best aspects from ICO and combines it with its own unique model. Let’s see how it makes a difference:-
Table of Contents
Technology vs. Finance
Initial coin offering is used by the startups and small businesses to kickstart their ventures, it helps them sideline venture capital capitalists and angel investors. Whereas, approach of finance companies involve hedge funds and capital firms which employ blockchain based tokens just to ensure the global accessibility of financial offerings.
Read More: What do you know about the Security Token Offering?
Business Model vs. Idea
Most of the entrepreneurs who launch their project with ICO do not have a business model and client-base to follow. When you invest in an ICO, you need to totally depend on the idea of the business and people who are going to run it. On the other hand, security token offerings are backed by financial assets that ensure income, it gives you surety about your investment. There is a lot of strategic input which goes into STO and it ensures that earnings are disbursed duly according to the contribution of investors.
Funding vs. Capital
Funds that are raised by ICOs are used by the startups for various purposes. From rent to payments to employees and maintenance, everything is covered through it. STOs are structured in a way that they are fully utilised by the investors. The former gives many chances to the latter to enhance the profits by accelerating the value of portfolio. On the contrary, in terms of ICO, you need to completely depend on the success of the project.
Professional Investment vs. Crowdfunding
Initial Coin Offering is an instrument for crowdfunding, it was started by the platforms like Kickstarter, Seedmatch, Companisto and Indiegogo etc. It could be done even with a small contribution of 1.000$ per individual and the focus remains on involving more people into it. On the other hand, security token offering is concerned on aiming at professional investors with the starting price of approximately 50k$ or 200k$. With this medium, the focus of company is always increasing the advantages of fund.
Regulated vs. Unregulated
When it comes to regulations, ICOs have faced a lot of questions. Apart from China and the USA, there is no other country that regulates ICO. The launch of tokens through this medium and its profit distribution makes it a little more questionable. Security token offerings are already regulated, they are also protected by many acts and bodies like SEC.
Which one is better?
ICO definitely widens your reach and can help you raise a giant sum. It is also a more accessible and cost-effective means for the entrepreneurs to kickstart their enterprise. Security token offerings are for those who seek more security and assurance for their investors.
Whatever your preferred method of crowdfunding is, Technoloader helps you make your business vision clear. It is the best STO development company and you can vouch on us for the success of your business.
