In an hour I'll be speaking on a panel at the Bitcoin & Ethereum Summit. The topic for the panel is ICO vs. VC. As a prelude to the talk, here's a table that compares venture capital (VC) investment with initial token offerings (ITO)/initial coin offerings (ICO) sales:
VC | ICO |
---|---|
Rich investors who supply the VCs with capital | A wide group of sophisticated members of the public |
Costly and lengthy due diligence | Very little or no diligence |
Person making decision is accountable to other people | Person making decision is putting their own money in |
Companies pitch investors, usually with 1:1 meetings | Companies put information online |
Proprietary software and patents are key | Open and public software is important |
A business plan is essential | Software development talent is essential |
Investor decisions driven by: fear of losing money | Decisions driven by: fear of missing out |
Well-developed models and conventions | Rapidly evolving models and approaches |
Very illiquid investments, rarely results in public trading | Liquidity is often fairly quick, (public) resale is common |
Local investors, local companies | Global everything |
Sometimes government subsidized | Never government subsidized |
Financially and legally complicated | Technically complicated |
Financial projections are important | Financial projects are rarely made |
Terms favour investors | Terms favour companies |
Selling a company's future | Selling a company's products |