Venture Capital Days Are Long Gone, According to Industry ObserversJuly 17, 2018
Many industry observers concluded that the venture capital days are no longer. They came to this conclusion after the volatile rise of ICO fund-raising model’s popularity. It is true that the ICO market exploded the last year and a half. In the first quarter of this year, ICO funding has easily outdone the year 2017’s full-year sum.
It seems like many investors see ICOs be the only solution is going forward seeing its advantages. With ICOs, retail investors have the ability to contribute to any projects that in their belief has potential. Additionally, ICOs give them the freedom that they themselves can grant companies. All these make ICOS seem like the key to the future.
Still, the Venture Capital world does not like to stay in the sidelines. The sector is strongly searching for profitable opportunities. This means that, eventually, it will find that blockchain and cryptocurrencies are opportunities they cannot pass up. Since cryptocurrency’s rise, many venture capital firms took the time to establish themselves in the crypto ecosystem.
As early as 2013, many crypto-centric funds haven began to appear. The reasoning behind VC’s crypto interest is quite simple. Crypto and blockchain open a market for VC with untapped potential for profit. The crypto market provides substantial financial flexibility and liquidity. Another reason is the fact that blockchain is here to stay. The mainstream is quickly adopting the technology for various applications.
With that, VC doesn’t plan to be left out and so has started to adapt. With venture capital, there is one problem in terms of poor-performing investment. This is their incapability of withdrawing easily. That is, in traditional funding, a check that is signed and deposited will have funds difficult to recoup outside of IPO or an acquisition. This could lead to a sizeable loss in venture capital portfolios.
But with blockchain, VCs can take advantage of a significantly flexible vehicle for investment. Venture capitals have plenty of investment models. They have many they can choose from when purchasing into a new project. For instance, they can choose the SAFT or Simple Agreement for Future Tokens model. This one offers great benefits such as allowing companies into funding projects in pre-ICO stages.
Furthermore, crypto marker’s liquidity offers VC with profits that are faster and easier to realize thanks to blockchain-based companies. Instead of shares, investors receive tokens which are assets they can easily unload if their investment underperforms. Investors say that venture capitals are gone but by learning to adapt, VCs can definitely move on with cryptocurrency.