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Do you think I should consider an ICO for a company which has been unable to close its seed round (except under ridiculously bad terms)? I have an extremely st

Do you think I should consider an ICO for a company which has been unable to close its seed round (except under ridiculously bad terms)? I have an extremely strong association between the words ICO and "scam", but I also recently found out that seed rounds are basically non-existent [1] If the SEC tacitly allows for "good-faith" ICO's, I would consider it. I don't want to shutter the work of my cofounders and contributors just because the seed-stage startup ecosystem is this broken. However, I have gone down extremely long rabbit holes and I am very wary. I would like to raise approximately 300k for a play that is built for an acquisition for a major player (within a small number of years). We got one term sheet for effectively 51% of the company for $17k or so. (That was from a real VC.) There were no other serious offers. Another (more promising?) alternative would be to bootstrap doing something unrelated. For example we have some expertise on our team in machine learning and perhaps could use it in an unrelated market where the size of the opportunity is pretty small (and it's pretty competitive). Is ICO worth exploring at this stage? (Bearing in mind that we are built for acquisition.) We are a "real" startup and don't have anything to do with cryptocurrencies or tokens. I also personally think the SEC does fantastic work that makes the whole startup ecosystem, and indeed investment at all, possible. There is a reason the United States investment climate is one of the best in the world, if not the best, and I think the SEC and general legal framework is one of these. So I am strongly biased against unregulated ICO's and would be very happy to submit to any oversight that would increase transparency and investor protections. [1] https://news.ycombinator.com/item?id=17284796 https://news.ycombinator.com/item?id=17284796

JumpCrisscross 8y ago
> I also recently found out that seed rounds are basically non-existent $8.5 billion were invested across close to 14,000 seed and angel-stage rounds in 2017 [1]. On both deal frequency and gross volume, seed and angel financing grew from 2016. [1] https://news.crunchbase.com/news/q4-2017-global-report-vc-sets-annual-records-back-strong-late-stage-results/ https://news.crunchbase.com/news/q4-2017-global-report-vc-se...
- logicallee 8y ago
  > close to 14,000 seed and angel-stage rounds in 2017 worldwide. :) That's "basically non-existent". Maybe you can flip it around like this: the number of people worth at least $30 million worldwide is 226,450. https://en.wikipedia.org/wiki/Ultra_high-net-worth_individual https://en.wikipedia.org/wiki/Ultra_high-net-worth_individua...
jeremyt 8y ago
Try reg A+
- npt4279 8y ago
  Reg CF would be far cheaper, faster, and easier
  - xmly 8y ago
    CF then A+. I think SEC gives pretty good choices already. But majority ICOs just choose avoid US investors and SEC
Animats 8y ago
Do you think I should consider an ICO for a company As soon as you said "for a company", it became an ICO the SEC would consider a security. Read the actual article closely.
- jypepin 8y ago
  I don't think OP would have any issues with that. Their problem seems to be that they can't find financing through a regular seed round, and are asking if considering an ICO would be a good idea.
  - logicallee 8y ago
    yes and yes.
omarchowdhury 8y ago
"We are a "real" startup and don't have anything to do with cryptocurrencies or tokens." Then no, you should not be attempting an ICO.
- logicallee 8y ago
  Can you elaborate on your reasoning for saying this? (Below what you chose to quote.) At a guess, your reason for saying this is that you consider doing an ICO to require extremely sophisticated expertise in "cryptocorrencies or tokens". Like if I had said "We don't have anything to do with cryptography or any expertise in cryptography. Should we roll our own cryptographic protocol?" Then the answer is "Then no, you should not." Are you saying the same thing? If we're not experts in ICO's and crypto currency (if indeed it has nothing to do with our business) then we should not be doing anything with it? (i.e. is it only appropriate for companies that are specialized in it?) Please elaborate if you can. And thanks for the response!
  - omarchowdhury 8y ago
    If your business has nothing to do with cryptography or you are not are cryptographers, then no, you should not be rolling your own cryptographic protocol. As for the previous comment, I mean that if your business has nothing to do with cryptocurrencies or blockchain, and your entire motivation is to jam in some vague token into your business model for the purpose of fundraising, then no you shouldn't be doing an ICO. Do what makes sense from all angles, not just the one angle of needing a fundraising method.

JumpCrisscross 8y ago

> I also recently found out that seed rounds are basically non-existent $8.5 billion were invested across close to 14,000 seed and angel-stage rounds in 2017 [1]. On both deal frequency and gross volume, seed and angel financing grew from 2016. [1] https://news.crunchbase.com/news/q4-2017-global-report-vc-sets-annual-records-back-strong-late-stage-results/ https://news.crunchbase.com/news/q4-2017-global-report-vc-se...

logicallee 8y ago
> close to 14,000 seed and angel-stage rounds in 2017 worldwide. :) That's "basically non-existent". Maybe you can flip it around like this: the number of people worth at least $30 million worldwide is 226,450. https://en.wikipedia.org/wiki/Ultra_high-net-worth_individual https://en.wikipedia.org/wiki/Ultra_high-net-worth_individua...

jeremyt 8y ago

Try reg A+

npt4279 8y ago
Reg CF would be far cheaper, faster, and easier
- xmly 8y ago
  CF then A+. I think SEC gives pretty good choices already. But majority ICOs just choose avoid US investors and SEC

Animats 8y ago

Do you think I should consider an ICO for a company As soon as you said "for a company", it became an ICO the SEC would consider a security. Read the actual article closely.

jypepin 8y ago
I don't think OP would have any issues with that. Their problem seems to be that they can't find financing through a regular seed round, and are asking if considering an ICO would be a good idea.
- logicallee 8y ago
  yes and yes.

omarchowdhury 8y ago

"We are a "real" startup and don't have anything to do with cryptocurrencies or tokens." Then no, you should not be attempting an ICO.

logicallee 8y ago
Can you elaborate on your reasoning for saying this? (Below what you chose to quote.) At a guess, your reason for saying this is that you consider doing an ICO to require extremely sophisticated expertise in "cryptocorrencies or tokens". Like if I had said "We don't have anything to do with cryptography or any expertise in cryptography. Should we roll our own cryptographic protocol?" Then the answer is "Then no, you should not." Are you saying the same thing? If we're not experts in ICO's and crypto currency (if indeed it has nothing to do with our business) then we should not be doing anything with it? (i.e. is it only appropriate for companies that are specialized in it?) Please elaborate if you can. And thanks for the response!
- omarchowdhury 8y ago
  If your business has nothing to do with cryptography or you are not are cryptographers, then no, you should not be rolling your own cryptographic protocol. As for the previous comment, I mean that if your business has nothing to do with cryptocurrencies or blockchain, and your entire motivation is to jam in some vague token into your business model for the purpose of fundraising, then no you shouldn't be doing an ICO. Do what makes sense from all angles, not just the one angle of needing a fundraising method.