Reason Behind Success of Crowdfunding ICO Platform
We would have heard about fundraising strategies have been prevalent for startups all the time. A good project idea allows receiving millions of dollars from investors.
In the previous days, startups might go directly to individuals and ask them to back the project. This was termed to be Crowdfunding. However, nowadays most of the startups have started to issue digital tokens that promise the utility of future services.
It was none other than Initial Coin Offering(ICO). An ICO in the world of cryptocurrency defines the scheme by which a community raises funds for a new cryptocurrency project.
The crypto world experienced this new scheme of fundraising which boosted their pockets in the year 2017. According to ICORating, it was recorded that ICOs have raised around $8.3 billion in the first half of 2018 which has doubled than the previous year!
ICO Vs Traditional Crowdfunding
Traditional Crowdfunding is the strategy leveraged by small and medium enterprises to raise funds for their projects. This fundraising is performed by a large set of people on the Internet. For instance, there are Traditional Crowdfunding platforms such as Kickstarter or GoFundMe which are intended to raise funds. Pebble is one such example for Traditional Crowdfunding platforms which has managed to raise over $10 million from people around the globe.
While in the case of Initial Coin Offerings, the startup will have the idea of the project and would require funds from the investors to kick-start them. The primary and the crucial difference between both is, Initial Coin Offering will assist the startups which have the idea only for Blockchain projects. But in the case of Traditional Crowdfundings, the project can be of any domain.
In ICOs, the startup will initially draft a whitepaper which includes the primary ideas, the team behind the token development, the business model, current market overview, etc. With this, most of the investors who are interested in the idea will start purchasing the Tokens. With the rise of price in tokens and gaining the required funds for the project, the Initial Coin Offering strategy remains beneficial from both the ends!
Why Crowdfunding ICO Platform is a way better than Traditional Crowdfunding?
If you are considering a fundraising campaign, an ICO can bring a huge amount of money in a short period of time from the people across the globe. Moreover, in the case of ICO, the markets offer higher liquidity with the fluctuations each day.
With higher liquidity, the value of the cryptocurrency enhances as the business & projects start to raise. But in the case of Traditional Crowdfunding, there is no such liquidity ensured!
There are great advantages for both Entrepreneurs and Investors. For Entrepreneurs, offering tokens to investors are liberating, particularly due to the definition of rights. Moreover, they can Pre-Sell ICOs a project under the development, which allows the companies to validate the business models, build the target customer bases and communicate with them even before the project gets launched!
Since ICOs aren’t intended to be launched in a particular location, there is a possibility to reach a wider set of audience. Hence, there are high possibilities of obtaining investors to fund the projects. While in traditional fundraising, it is typically reserved for institutional investors!
Therefore, launching Initial Coin Offerings are the best way to fund raise the projects which remains beneficial for both the Entrepreneurs and investors undoubtedly!