5 ms·

yeah, though, it seems they want to go legit through the eyes of regulators. personally, I would've preferred an ICO. It's the new-world fundraising model that

yeah, though, it seems they want to go legit through the eyes of regulators. personally, I would've preferred an ICO. It's the new-world fundraising model that should be normalized.

moneywoes 5y ago
What are the advantages of an ico? I vaguely recall the ico boom and bust in 2017. Any basics?
- unemphysbro 5y ago
  freedom and access - anyone can tailor a unique or novel fundraising models in code. in theory it's pure democratization of financial instruments. i recommend anyone new to the space to play around with contracts on testnets. now anyone with basic coding know-how can play the types of financial games limited to the select few through credentialization, connections, or regulatory barriers. i think it's the coolest thing ever.
arcticbull 5y ago
ICOs absolutely ruin the concept of a venture-backed business. By providing liquidity on day 1, you release onto an uninformed populace a token with zero intrinsic value. At that point, your goal is not to build a business but rather to market your token - as that is where your compensation comes from. Your compensation isn't tied to any value you create in the business whatsoever - as it would be when trying to raise from VCs - but instead how much hype you can generate. Now that your blue-sky security (your token) is your product, any money you spend trying to build a business puts you at a disadvantage relative to competitors who do not. Growth isn't even reflected in the token itself since tokens are not equity. It's not even an advantage to token holders for token issuers to try and build a business haha. That's why in the last 14 years not a single ICO or token-first business has been successful in creating a business. It is counterproductive to an ICO to actually try and build something under it, for everyone invovled.
- boppo1 5y ago
  Sure, but with an IPO only banks and really rich people get to join the "presale", which sucks.
  - arcticbull 5y ago
    I guess what I'm saying is, a large amount of nothing isn't better than a small amount of something. Not to the individual, and not to society. Banks and institutions are owned by pension funds, 401(k)s and individuals meaning that benefit accrues to a whole ton of people. Further, of course, employees stand to join the 'presale' too, and accreditation only requires $200K/yr in income. At that point you're free to invest in any business that'll take you on for value you create. Plus there's the ol' JOBS Act, Regulation A+ and Regulation CF.
    - boppo1 5y ago
      >only requires $200K/yr in income. Are you making a joke here? It's pretty not-great when an average person (that is x<$200k/yr) hears about a dropbox or coinbase IPO but is excluded because they're not rich. One might make the argument that that's just gambling, to which I would point out that accreditation is not required for casinos or the lottery.
      - arcticbull 5y ago
        That's to take all of the guard rails off. You can participate in earlier stage fundraising without being accredited via Regulation A+ and CF. The truth is, Dropbox would never have taken your money in the first place unless you brought something to the table. There's real adverse selection risk in allowing anyone to participate. Why would any startup founder take your cash for equity if you don't provide any value, when they could just stroll down Sand Hill Road with a burlap sack and be done with it? That would leave them with a network, connections, advisors, folks who have built successful businesses before and a portfolio of other companies they can leverage. The only ones willing to take dumb money in small quantities from nobodies will have been kicked out of every office on Sand Hill. Not even fairly prominent angel investors make the cut for in-demand seed or pre-seed investments. By the time you get to a series B or higher, you may as well just grab a position in a mutual fund that participates. > It's pretty not-great when an average person (that is x<$200k/yr) hears about a dropbox or coinbase IPO but is excluded because they're not rich. By the time a company gets to an IPO, you're not going to see material returns by participating in the IPO itself. You're just not. You may or may not get some initial small spike, but it's as likely to go down. Just look at $COIN. It opened at $381 and is currently sitting at $248. That's not where the value is in being an accredited investor. That's just a coin toss. On the other hand there's huge returns to be made in the stock market from companies that publish financials. Check out $TQQQ or zoom out on $SQ or $TSLA. > One might make the argument that that's just gambling, to which I would point out that accreditation is not required for casinos or the lottery. Casinos and lotteries publish odds. Public companies publish financials. Private companies needn't do any of that.

yeah, though, it seems they want to go legit through the eyes of regulators. personally, I would've preferred an ICO. It's the new-world fundraising model that should be normalized.

moneywoes 5y ago

What are the advantages of an ico? I vaguely recall the ico boom and bust in 2017. Any basics?

unemphysbro 5y ago
freedom and access - anyone can tailor a unique or novel fundraising models in code. in theory it's pure democratization of financial instruments. i recommend anyone new to the space to play around with contracts on testnets. now anyone with basic coding know-how can play the types of financial games limited to the select few through credentialization, connections, or regulatory barriers. i think it's the coolest thing ever.

arcticbull 5y ago

ICOs absolutely ruin the concept of a venture-backed business. By providing liquidity on day 1, you release onto an uninformed populace a token with zero intrinsic value. At that point, your goal is not to build a business but rather to market your token - as that is where your compensation comes from. Your compensation isn't tied to any value you create in the business whatsoever - as it would be when trying to raise from VCs - but instead how much hype you can generate. Now that your blue-sky security (your token) is your product, any money you spend trying to build a business puts you at a disadvantage relative to competitors who do not. Growth isn't even reflected in the token itself since tokens are not equity. It's not even an advantage to token holders for token issuers to try and build a business haha. That's why in the last 14 years not a single ICO or token-first business has been successful in creating a business. It is counterproductive to an ICO to actually try and build something under it, for everyone invovled.

boppo1 5y ago
Sure, but with an IPO only banks and really rich people get to join the "presale", which sucks.
- arcticbull 5y ago
  I guess what I'm saying is, a large amount of nothing isn't better than a small amount of something. Not to the individual, and not to society. Banks and institutions are owned by pension funds, 401(k)s and individuals meaning that benefit accrues to a whole ton of people. Further, of course, employees stand to join the 'presale' too, and accreditation only requires $200K/yr in income. At that point you're free to invest in any business that'll take you on for value you create. Plus there's the ol' JOBS Act, Regulation A+ and Regulation CF.
  - boppo1 5y ago
    >only requires $200K/yr in income. Are you making a joke here? It's pretty not-great when an average person (that is x<$200k/yr) hears about a dropbox or coinbase IPO but is excluded because they're not rich. One might make the argument that that's just gambling, to which I would point out that accreditation is not required for casinos or the lottery.
    - arcticbull 5y ago
      That's to take all of the guard rails off. You can participate in earlier stage fundraising without being accredited via Regulation A+ and CF. The truth is, Dropbox would never have taken your money in the first place unless you brought something to the table. There's real adverse selection risk in allowing anyone to participate. Why would any startup founder take your cash for equity if you don't provide any value, when they could just stroll down Sand Hill Road with a burlap sack and be done with it? That would leave them with a network, connections, advisors, folks who have built successful businesses before and a portfolio of other companies they can leverage. The only ones willing to take dumb money in small quantities from nobodies will have been kicked out of every office on Sand Hill. Not even fairly prominent angel investors make the cut for in-demand seed or pre-seed investments. By the time you get to a series B or higher, you may as well just grab a position in a mutual fund that participates. > It's pretty not-great when an average person (that is x<$200k/yr) hears about a dropbox or coinbase IPO but is excluded because they're not rich. By the time a company gets to an IPO, you're not going to see material returns by participating in the IPO itself. You're just not. You may or may not get some initial small spike, but it's as likely to go down. Just look at $COIN. It opened at $381 and is currently sitting at $248. That's not where the value is in being an accredited investor. That's just a coin toss. On the other hand there's huge returns to be made in the stock market from companies that publish financials. Check out $TQQQ or zoom out on $SQ or $TSLA. > One might make the argument that that's just gambling, to which I would point out that accreditation is not required for casinos or the lottery. Casinos and lotteries publish odds. Public companies publish financials. Private companies needn't do any of that.