The first ICO, Mastercoin, officially launched in 2013, and now just five years later the world has gone crazy for coin offerings. These fundraising mechanisms have heralded a new age of expedited innovation for young upstarts eager to disrupt any and every industry with decentralized solutions.
While some naysayers still think the ICO boom will eventually combust, many experts across the blockchain and financial spheres believe that, although ICOs are still maturing, their presence and impact will reverberate across industries for years to come.
We may not be able to predict, with certainty, what the future of ICOs holds, but we can acknowledge the ways in which their arrival is shaping fundraising and business innovation. Here are three concepts the arrival of ICOs has already embedded in businesses across verticals.
Decentralization of innovation
As fundraising methodology that supports decentralized solutions, it is fitting that ICOs also promote the decentralization and democratization of investment opportunities. One of the most powerful aspects of ICOs is the way in which they galvanize large groups of people from varying locations and professional backgrounds to invest in and support a new, decentralized venture. ICOs give people the opportunity to both start their own ventures and grow their investment portfolios.
If you take a look at any of the top top ICO lists, one of the first things that will jump out is the sheer volume of listings. Innovators from all locations and all industries can see their ideas come to life by connecting with investors and initiating a token sale.
Whereas previously they may have had to spend months pitching VCs just to get into the room, now they can be more proactive in their own fundraising fate by assembling a strong team, crafting a watertight whitepaper, and building strong community engagement plans.
A community first mentality
ICOs have flipped the notion of “if you build it, they will come” on its head. Now companies no longer have to wait for a perfected product before engaging with audiences. To have a successful ICO, organizations need the support of crypto audiences and influencers. Companies vying for coin offerings have to make the effort to start conversations with potential end-users well before their product is perfected or, even, finished.
Successful ICOs work because the team behind them excels at involving a larger community. Businesses, whether in the blockchain sphere or not, are gradually also adapting a community-first mentality. Especially in today’s atmosphere, building relationships with consumers must be the priority over simply selling to them. People have so many choices regarding which companies they engage with, and communicating (regularly) with audiences is an assured way to build stronger relationships.
Liquidity-based employee empowerment
In a recent interview with new gen apps, Emerson Taylor, the founding partner of Philosophie discussed how ICOs are increasing team member’s liquidity. Previously, startup employees were offered equity for their contributions, but equity is difficult to sell. But offering coins or tokens can grant more power to individual team members, which could go a long way in talent recruitment.
Taylor does go on to address the uncertainties that still need to be worked out in these types of contracts (like lock-up periods) but one thing is for sure, ICOs have introduced a new age of decentralized power, even within team structures, that we cannot walk back.
The future of ICOs is uncertain. In the next six months we could see new regulatory issues and protocols; we may see investors demand more of companies before offering their financial support; we may see a volatile token market dictate investor enthusiasm. The future may be unclear, but the people-first philosophies that ICOs have ushered in will likely stay and impact all business models from here on out.