ICOs and VCs

&gt;The investors who bought your token, like public market investors, may be gone tomorrow, next month, or next year, having moved on to the next big thing, leaving you with little to show for it other than the money you raised.<p>Oh boy...<p>&gt;VCs, at leas the best ones, are there for your company in good times and bad. There is a difference, trust me.<p>This part made me laugh so bad, my entire body hurts. Now, I know pretty well who he is, thus why he may not realize how much bad VCs hurt the industry, especially when a vast number does exactly what he said: leaving as soon as there are any signs of trouble. And I know that from experience.<p>Now, do I always agree with ICOs? Not really, selling promises that particular way is bound to lead up to some disappointment from one side or the other. But they are perfectly valid to fund yourself if your service, your core business model can be compartmentalized that way. As he said: &quot;The token that you sell in your ICO is the atomic unit of your business model.&quot;

This whole ICO affair will not end well. Here is a guy complaining about not being able to buy the BATs at the crowdsale: <a href="https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;ethtrader&#x2F;comments&#x2F;6efsc8&#x2F;bat_ico_whalesale_completely_against_the_ethos_of&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;ethtrader&#x2F;comments&#x2F;6efsc8&#x2F;bat_ico_w...</a> - this is a serious gold rush attitude. Those people don&#x27;t seem to understand that most (9 for 10 some say) startups fail.<p>And the tokens they are buying is just a promise - they don&#x27;t bind the company to do any thing. The company promises to use the BAT token in their future monetization model - but in fact they can pivot at any point, like many (if not most) startup do, and do something else, or maybe even do yet another ICO with another token. And that is on top of all the problems with crowdfunding - where even if there is a legal binding, and maybe a fractionary ownership - without all the regulations that were invented to protect the investors - the founders&#x2F;executives still can do anything with the money they received from the funding event: <a href="https:&#x2F;&#x2F;medium.com&#x2F;@zby&#x2F;the-problem-with-crowdfunding-81b53f963387" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;@zby&#x2F;the-problem-with-crowdfunding-81b53f...</a><p>Update: Even if now most ICO creators are honest - then soon they&#x27;ll be crowded out by scammers, because honest funders will find other ways to fund their starups - but for scammers it will never be easier than with ICOs.

Ico&#x27;s seem to primarily be a way to get around securities regulation, and I suspect that someone is going to get prosecuted for it eventually.

Fred&#x27;s not a dumb guy, even though I never agreed with his Android over iOS statements (Android first, etc). I think he&#x27;s smart and to him, my opinion doesn&#x27;t matter, I&#x27;m sure.<p>However, vc is a hundreds, if not thousands of years old. Fine tuned and tweaked in the 80&#x27;s on to the dot com and thru facebook &amp; google and beyond.<p>ICO is just a few years old - it&#x27;s typical for the disrupted to not feel threatened until it&#x27;s too late. This, in my mind, is the real model going forward. Fuck pandering to Sand Hill road or SV at all - launch an ICO from anywhere in the world on your whitepaper and testnet (shaky???) dev...<p>ICO&#x27;s may seem ridic, but this is just the beginning. We are now running at internet speed and there&#x27;s gonna be a point (soon? who knows when) where this stuff is going to all be automated and 24 seconds will seem quaint.<p>Welcome to high frequency funding.

VCs don&#x27;t like ICOs because they expose how irrational raising money is. They hamper the whole narrative of VCs being &quot;experts&quot; when the truth is it&#x27;s all a casino financed by the Fed. VCs are used to controlling the narrative of WHY a company deserves money.

Hey, we could sell equity in our company for money....or we could give out gift certificates (tokens) and keep all the equity. Sure, as soon as we&#x27;ve got all the dummies money, the incentives will massively shift for us so that we&#x27;re better off doing a new ICO than building anything, but they won&#x27;t notice. Who cares if distributed systems are an overhead and not an efficiency, we can all get rich!

I read it and still have no clue what is it about, what&quot;ICO&quot; stands for. Never explained

&gt; VCs, at leas the best ones, are there for your company in good times and bad. There is a difference, trust me.<p>This is backwards. Raising via an ICO mean no VC can ever push you out as CEO or take control of your company. Their priority is making the company get to a big exit, with or without you. When Ev was running Twitter, Fred wasn&#x27;t a fan of his and had not problem plotting behind his back with Jack and eventually pushing him out.

I really dont understand the value behind ICOs.<p>- there is no guarantee of limited supply of tokens ( no promise that BAT will be limited )<p>- there is no guarantee that company will not come up with secondary token (ex: advanced attention token)<p>- Also there is no indication of what 1 BAT will get you. All calculations etc subject to change

Thread-starter here.<p>I have raised VC, PE, and debt. Early-stage and late stage. Here&#x27;s my take on &quot;ICO vs VC.&quot;<p>ICO&#x27;s:<p>For the investor, they are akin to commodity futures trading. The underlying value of the token is nil, as is the degree of control over the underlying property. But returns from price speculation can be very rich.<p>For the issuer, they have the money virtually without strings attached. There is no other form of assistance and no loyalty implied in either direction.<p>For example, I&#x27;d be shocked if there were positive &quot;operational&quot; returns from a token like the Brave coin. For that to happen, Google, Facebook, and the rest of the ad industry would have to grant sanction to the vendor of a Chromium-based browser startup yo turn the entire industry on its side. I doubt it. Seriously.<p>VCs:<p>For the investor, they get some modicum of ownership and control of the underlying property – sometimes not much but usually a lot. There is an implied responsibility to help with follow-on funding, but nothing solid. The investment is risky but not speculative.<p>For the issuer (of preferred shares AKA the company), they get the money with all kinds of strings attached. If the VC is top-tier (e.g., Fred, Kleiner, NEA, etc.), significant branding, easy intros, and many other benefits can accrue. If the VC is less prestigious, the operational impact is more neutral. (No VC can make your company grow or be successful – that&#x27;s on you.)<p>My opinion:<p>1. If I could pull off an &quot;ICO&quot; (bad name) at my next company, I&#x27;d do it immediately. Great upside and little downside.<p>2. I say &quot;immediately&quot; because I don&#x27;t think that this vehicle will last long in its current unregulated state. There will be failures. There are enemies. There will be evil deeds (fraud), and those deeds will involve unaccredited investors.<p>3. The ICO will be a short-term speed bump to VCs.<p>4. That all said, who wants to join me and start an &quot;ICO production&quot; company to create the coins and infrastructure for them to do their own ICOs? Speed is life, and I know some VCs... :)

The BAT ICO is not a success story. It shows how f*cked up the current coin markets are. 4 people saved &gt;50% of coins. They are not interested in the company (how can they communicate huh?) they want to sell quickly when the coin hits Poloniex. VCs are not over. The VC advantage derives from the real world experience and connections they can provide. Also no VC ever would have invested in BAT itself. Everyone knows, if there is an adtech revolution, it will come from Google and Facebook not an adblock browser producer.

I just don&#x27;t understand this.<p>A national currency is an irredeemable medium of exchange, made valuable because it&#x27;s -- by law -- exempt from capital gains tax (it measures capital gain), and because it&#x27;s been given legal tender status.<p>Why would anyone trade an irredeemable currency issued by a private corporation? &quot;Currency&quot; is surely a misnomer, because no one would want to buy or sell goods and services in exchange for it, which makes it more like irredeemable equity, which makes no sense either.

VCs are actually very interested to play a part in this new form of financing. I live in the Bay Area and have been talking to friends in VCs - from my understanding, it&#x27;s legally risky for them to directly invest in ICOs and they are putting money in other funds that can invest in ICOs like Polychain - this is truly an exciting time!<p>Also, how else you think BAT sells so fast if it wasn&#x27;t for institutional money

To give an example of the current insanity of ICOs, take a look at the terms &amp; conditions for a recent token sale - from <a href="https:&#x2F;&#x2F;patientory.com&#x2F;" rel="nofollow">https:&#x2F;&#x2F;patientory.com&#x2F;</a> :<p><a href="https:&#x2F;&#x2F;patientory.com&#x2F;token-sale-terms.pdf" rel="nofollow">https:&#x2F;&#x2F;patientory.com&#x2F;token-sale-terms.pdf</a><p><i>Ownership of PTOY carries no rights, express or implied, other than the right to use PTOY as a means to obtain Services, and to enable usage of and interaction with the Platform, if successfully completed and deployed. In particular, you understand and accept that PTOY do not represent or confer any ownership right, stake, share, security, or equivalent rights, or any right to receive future revenue shares, intellectual property rights, or any other form of participation in or relating to the Platform, and&#x2F;or Foundation and its corporate affiliates, other than rights relating to the receipt of Services and use of the Platform, subject to limitations and conditions in these Terms and applicable Platform Terms and Policies (as defined below). PTOY are not intended to be a digital currency, security, commodity, or any other kind of financial instrument.</i><p>So.. by buying the tokens, you are getting, nothing, basically.<p><i>You have a sufficient understanding of the functionality, usage, storage, transmission mechanisms, and other material characteristics of cryptographic tokens like Bitcoin and Ether, token storage mechanisms (such as token wallets), blockchain technology, and blockchain-based software systems to understand these Terms and to appreciate the risks and implications of purchasing PTOY;</i><p>You&#x27;ve also got to fully understand blockchains.<p><i>You have carefully reviewed the code of the Smart Contract System located on the Ethereum blockchain at the addresses set forth in Exhibit B and fully understand and accept the functions implemented therein;</i><p>You&#x27;ve also got to be an expert programmer fluent in all ethereum&#x27;s security weaknesses, plus you better have a disassembler handy to reverse engineer their compiled code (they don&#x27;t provide any source code - plus, &#x27;Exhibit B&#x27; doesn&#x27;t event give the contract address anyway)<p><i>You are not purchasing PTOY for any other purposes, including, but not limited to, any investment, speculative, or other financial purposes;</i><p>Sure, sure. That&#x27;s why people are buying these things, right?<p>It goes on... you also agree to indemnify the company against everything, all warranties are disclaimed, no liabilities can be held against them, you waive your rights to legal actions against the company, or any class actions (you must agree to arbitration). Oh, and they naturally reserve the right to modify these terms at any time without notice.<p>No-one in their right mind would agree to these kind of terms, and yet they are common across many ICOs. It is madness. And I haven&#x27;t even mentioned their proposed application (healthcare on the blockchain) which is dumb in so many other ways.

I&#x27;ve heard some people complain about GNO&#x27;s dutch auction style offering, but only generically. Dutch auction seems like a good option for highly-anticipated coins like BAT. Does anybody have insight into why the dutch auction style isn&#x27;t more widely used?

VCs drag you into mainstream orthodoxies in order to be able to do an IPO on Wall Street. With ICOs around, who would put up with VCs again?

How does prevent fraud..maybe just some types? I dunno about this..