The Future of ICOs and the Potential of Securities Token Offerings

The Beginnings

It is less than five years since in July 2013 J.R. Willet did the first ever ICO (Initial Coin Offering) for the Mastercoin. Since then ICOs have raised cumulatively more than 3,7 US$ billion until December 2017. The year 2017 saw the explosion of the funds raised with this new funding technique. It is interesting to note that the historical high of deals closed by traditional Venture Capital (VC) — approx. 19.000 — is coincident with the beginnings of the ICOs in 2014. Since then the quantity of VC deals has dropped by almost 50% to approx. 10.000 deals in 2017. Moreover, the fact that the amount of money invested in VC has not dropped by the same amount, it is evidence that traditional VC is now focusing on less but larger deals. This means that VC does not fulfil the early funding needs of start-ups which then have turned to ICOs in order to raise funds.

(source Techcrunch.com)

Also crowdfunding has shown all its limitations when compared with the ICOs. There are numerous examples of start-ups which failed to raise even a few hundreds of thousands with crowdfunding campaigns and then raised…