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Will be interesting to see how this, as in the whole DAO space, works out. Part of the problem with the ICO craze in 2017* is that the founders got all the mone
by astoor 5y ago
Will be interesting to see how this, as in the whole DAO space, works out. Part of the problem with the ICO craze in 2017* is that the founders got all the money up front without having any obligation to do anything, so the tiny minority of well intentioned ones ended up simply enjoying the money rather than doing something hard like actual work. Seems like this is still a risk here - the founder can string people along for a few months or years until they lose interest, all the while drawing down the money and living rather comfortably.
* The other problem with the ICO craze is of course that the combination of money up-front and no obligations and anonymity meant almost all were simply out-and-out scams.
- loceng 5y agoWhich is why there are rules and layers of checks to actually IPO - another term misappropriated to ICO like currency was misappropriated for cryptocurrency to mislead; stock markets would lose all trust and credibility if they didn't curate and require due diligence.
- xiphias2 5y agoThere are laws for ICOs as well when they are marketed in US: they are securities. The SEC knows this perfectly, they just don't do anything for some reason.
- sokoloff 5y agoPerhaps we should look forward to innovations like “Special Purpose Acquisition Coins” then? SPACs have gotten rid of much of the diligence traditionally part of the IPO process.
- loceng 5y agoFrom my understanding may also be taking advantage of the money the government's currently printing - at the externalized cost of general society, an additional wealth transfer? I haven't looked read too much into SPACs yet, though they certainly did start to pop out of nowhere and in huge sums as "special purpose vehicles;" I'd sure love to raise a quick $1 billion SPAC though to fund my endless projects.
- acjohnson55 5y agoThat's not how SPACs work. You can only use the funding raised as basically a dowry for a merger with a private company. It's low risk to investors because they simply get their money back if 2 years pass without a merger, and the people who run the SPAC lose everything they spent on getting their SPAC to the stock market. Right now, the market is saturated with SPACs, but there are only so many private companies looking to go public.
- acjohnson55 5y agoThe filings are pretty much the same. The biggest difference, as far as I know, is there's no roadshow to get institutional investors onboard. But this isn't technically a requirement of an IPO. And a direct listing also skips that.
- pge 5y agoI think what the previous poster was referring to is that the filings for the SPAC (acquisition company) are the same as any other IPO, but there's nothing in the SPAC (just money and a management team). For the company that gets acquired by the SPAC, however, it's a different story. That company does not have to go through the IPO process itself, so it goes public with a lot less regulatory scrutiny than it would have had had it pursued an IPO itself.
- acjohnson55 5y agoThat's not really true though. The SPAC needs to file an S-4 before the deSPAC (the merger), which informs investors in minute detail about the target company and the merger deal. I don't know exactly how it compares to an S-1, but it's extremely comprehensive. The biggest difference I can see is that a traditional IPO can't succeed without getting institutional investors onboard, and there are strict guidelines about what can be pitched to them. The negotiations between a SPAC and its target company are much less constrained. I'm not an expert in this, so I'm probably wrong on some of the details, but my company is undergoing a SPAC merger, so I've tried to inform myself on how it works.