At the recent d10e event in Bucharest managing partner of Blockchain Capital Brock Pierce announced plans to partly raise a new $50 million fund by issuing its own digital tokens in an Initial Coin Offering (ICO) becoming the first VC to jump into the fray.
Pierce was pragmatic about it while announcing to the crowd in Romania – stating that it was a risk they really wanted to take, but was also a little uncertain how it would play out.
“Every morning I get up I am totally excited to enter into another day of Blockchain – we are investing half a million a month,” stated Pierce.
In a later interview in Bloomberg Pierce said the ICO could take place “in the next month or two,” and the company will more fully describe the tokens, which are expected to trade on secondary markets, in an upcoming offering memorandum, which will be issued through TokenHub in about a month.
“We think this is the future of venture capital,” Pierce said. “We’ll be the first in the world to do this. We want to democratize venture capital. We think this is going to change the game, this is going to completely disrupt the VC industry.”
Blockchain startups doing ICOs have raised about $270 million last year according to Blockchain researcher Smith & Crown and they are popular as even small investors typically afford to invest, you don’t need to be accredited and buyers can trade them on secondary markets, instead of sticking around long term.
The regulatory uncertainty around ICOs is what allows anyone from anywhere who wants to make the choice to invest, the ability to do so without being told they are unaccredited (not wealthy enough to play).
The regulatory uncertainty allows for the ICOs to move at pace of innovation that is not tied to pencil pushers lobbied by big interest groups to create laws that inhibit or even snuff out the ecosystem.
Governments are national while ICOs take place in a global setting. The US SEC and other regulatory bodies are moot for the most part as US and other investors are investing with pseudonymity using Bitcoin which is not even considered money by most governments – but rather a capital asset.
And for most ICOs, the startups are not even offering any equity but just the chance to buy into the currency at reduced rates for bigger profits after the ICO on the cyptocurrency exchanges.
The ICO community crowdsources due diligence on upcoming ICOs which offers a high level of self-regulation and industry security.
In the crypto-hangouts – particular at Bitcointalk where almost all ICOs are first broadcast, scores of net-savvy investors start googling the history of the founders and teams, ripping apart the code, hammering the theory, and generally kicking the living shit out of the concept – by the tens. Then they out scammers who end up shrivelling out the forum with their tails tucked and hang the ICO. You also have new companies like Smith and Crown doing great work analysing ICOs and others are now moving into that space and providing more centralised market intelligence.
In terms of ‘breaking the law’ when it comes to spending your own money as one sees fit in an investment they feel they can handle – Obama opened the doors slightly with the JOBS act and one does not have to be an accredited investor to reap rewards any longer. And so it should be.
But the Americans are already three years behind the UK and Netherlands in crowdfinancing. ICOs are, in particular, have been a panacea to American investors (particularly those with a lot of unclaimed cryptocurrency) who want to participate.
One glaring issue that many VC will have with the ICO arena is the fact that many of the projects are open source software and hardware projects which are usually the kind of investments that get kicked to the curb by most traditional investors. Propietary means patents and Intellectual Property means protection of assets. Giving everything away via Open Source is not considered the best business strategy by most investors. Except the ones who get it.
Secondly there is no equity in many cases – believe it or not – most Blockchain startups doing ICOs don’t go the equity route just to keep far from the problem of securities – and for most investors, they are happy to play the exchanges after the ICO and buy and sell much like the Forex scene.
Yes, it is the Wild West – there’s quite a lot of Bitcoin and Ether profit floating around that is getting pumped into these projects. Half of all Bitcoins are in the hands of less than 1000 people out of a $15 billion market cap. They are called Bitcoin whales. And they are the ones manning the pumps for a large part of the $270 million invested via ICOs over the past year.
Blockchain Capital is smart to take a leap into this space because it will encourage others – particularly if Pierce can turn a healthy profit.
Recently Polychain Capital raised $10 million from Andreessen Horowitz and Union Square Ventures for a cryptocurrency hedge fund, but Pierce it taking it one step further by actually doing his own ICO with Blockchain Partners. With Blockchain Partner’s strong track record and history of supporting the cryptocurrency scene, it’s highly like Pierce has nothing to worry about and this could be the beginning of the next chapter for venture capitalism.
- Humaniq Opens Pre-order Fund for ICO - March 27, 2017
- OpenLedger’s Apptrade (www.apptrade.io), the platform creating “Kickstarter for Apps on the Blockchain”, has received a $100,000 USD boost from OpenLedger ApS, the world’s first blockchain powered conglomerate. Powered by the digital token APPX, Apptrade creates portfolios, or groups, of apps, where if one of those apps becomes the next Instagram or Angry Birds, then the value of the portfolio rises. Ronny Boesing, CEO of OpenLedger ApS, explained that Apptrade’s initial token offering (ITO) changed its valuation in the middle of its crowd sale as an immediate response to the result of its preliminary offering. Boesing said, “The Apptrade platform is much too important to not succeed, and it was clear that we needed to adjust the valuation to make it more appealing to anyone deciding to participate. In addition, we wanted to show our belief in this project, and felt that there was no better way to show this than putting our money where our mouth is. OpenLedger will be adding a total of $100 000 USD to the Crowdsale over the next 7 days.” The minimum fundraising goal is $1M USD with a cap of $5M USD. With a total of 8.25M APPX tokens on offer, OpenLedger’s Apptrade ApS will back these tokens with 20% of the future revenue from the Apptrade platform, and any unsold tokens will therefore be distributed proportionally to all participants. All early bird participants, as well new participants, will receive the extra tokens according to the published Stage 1 structure, plus benefit from the additional tokens to be divided. Daniel Pineda, Founder of Apptrade says, “After listening carefully to feedback from public and private supporters, and with great consideration, we decided to update our master token valuation. We firmly believe that our platform, built on the ecosystem of OpenLedger and powerful BitShares financial trading technology, is a strong Blockchain project that will be a success for years to come. We feel that this is the right action to ensure a satisfactory outcome for all.” Apptrade’s final valuation is going to be based on the amount raised, whether $1M USD as its threshold or money back guarantee, or the maximum of $5M USD. The valuation of the Apptrade platform will be determined on what is raised. The deadline according to the escrow agreement is set to end on April 30 2017. Boesing continued, “This approach and change of valuation resulted from requests from within the community, and we hope to accommodate many more participants. But one thing is clear to all of the Early Birds – this is your lucky day!” - March 27, 2017
- Factom Launches Revolutionary Blockchain Suite of Mortgage Products - March 24, 2017
- Qtum Shatters ICO Records Raising $15.6 Million - March 24, 2017
- Blockchain Startup Sphre Announces ICO (Crowdsale) for Digital Identity Platform Called Air - March 22, 2017
- Kestrel sign ups to MTI’s blockchain driven solutions to deliver global growth - March 22, 2017
- The G20 Countries Should Investigate Blockchain Technologies to Build an Inclusive, Transparent, and Accountable Digital Economy for All - March 21, 2017
- Particl, a Distributed Marketplace Rethinking Privacy’s Future – Announced Seed Round - March 21, 2017
- ZrCoin To Do Initial Coin Offering (ICO) to Crowdfunds Commodities Option - March 21, 2017
- Canada’s Scotiabank and AlphaPoint Announce Successful Blockchain Trial - March 21, 2017
- Canada’s SecureKey taps IBM to put identity on the Blockchain - March 21, 2017
- Blockchain Startup Humaniq Launches London Office - March 21, 2017
- QRL Recruits Testers for High Security Quantum-Resistant Blockchain - March 20, 2017
- Blockchain of Things, Inc. Releases Paw Advanced REST Client Integration - March 19, 2017
- ConsenSys Named Official Blockchain City Advisor for the City of Dubai - March 16, 2017
- Bloq Launches BloqLabs to Connect Enterprises with Open Source Blockchain Innovations - March 16, 2017
- Multi-Million Dollar Research Institute Launched to Explore Blockchain Use Cases, Opportunities and Challenges - March 16, 2017
- Chamber of Digital Commerce Forms the Blockchain Intellectual Property Council - March 16, 2017
- Orebits & Symbiont Deploy Blockchain Technology to Digitize Gold Ownership - March 16, 2017
- Blockchain Capital to Raise its Third Fund via a Digital Token Offering in The First Liquidity-enhanced Venture Capital Fund - March 16, 2017
- The Exscudo Channels App Is A New Mobile Wallet And Secure Messenger - March 14, 2017
- Dao.Casino – Decentralising the Gambling Economy - March 14, 2017
- Chain of Points Adds American Internet Entrepreneur Jeff Pulver to Board of Advisors - March 14, 2017
- Nasdaq Releases NYIAX – A Blockchain-Enabled, Cloud-Based Media Trading Platform - March 14, 2017
- Lunyr Announces Crowdsale for the First Decentralized World Knowledge Base on Ethereum - March 14, 2017
- Coinsource, World’s largest bitcoin ATM network, Completes Historic Bulk Installation on US West Coast with 35 ATMs - March 14, 2017
- Bitwala Offers Bitcoin to M-Pesa Services in Kenya, Nigeria, Uganda, and Tanzania - March 12, 2017
- US SEC Regulators Reject Bitcoin ETF, Price Plunges, Recovers - March 11, 2017
- Google’s DeepMind plans Blockchain Health Record Tracking for Hospitals - March 10, 2017
- Coalition Forms to Address Digital Asset Taxation Uncertainty - March 10, 2017
- Livecoin, the Fourth Largest Altcoin Exchange Is Now Available in Eight Languages - March 9, 2017
- Australia Releases Blockchain Standards Roadmap - March 6, 2017
- Hyperledger Fabric Graduates with Honours – It’s Live! - March 4, 2017
- TaaS, the First Fully Transparent Closed End Fund Dedicated to Blockchain Assets, Adds International Banking and Marketing Experts as Advisors - March 2, 2017
- Kraken Acquires Cryptowatch and Launches New Trading Platform - March 1, 2017
- Switzerland’s Crypto Valley Association Founded To Build World’s Leading Blockchain and Cryptographic Ecosystem - March 1, 2017
- Massive Launch by Blockchain Industry for New Enterprise Ethereum Alliance - March 1, 2017
- Monax Joins Hyperledger Project, Brings Ethereum Technology - February 28, 2017
- Chain of Points Adds Internet Pioneer and iPayYou Founder Gene Kavner to Board of Advisors - February 27, 2017
- Chamber of Digital Commerce and Structured Finance Industry Group Partner to bring Blockchain to Securitization - February 27, 2017
- Blockchain Startup Bloq Acquires Blockchain Analytics Pioneer Skry - February 27, 2017
- Edgeless.io Launches its ICO to become the first fully transparent Casino, Offering 0% Edge - February 27, 2017
- Storj Labs Raises $3 Million in Seed Funding - February 26, 2017
- Northern Trust And IBM Pioneer Use Of Blockchain Technology To Help Transform Private Equity Administration - February 26, 2017
- 0x – An Open Protocol for Decentralized Exchange on the Ethereum Blockchain - February 26, 2017
- Global Blockchain Project FERMAT Announces Significant Alpha Release for the “Internet of People” - February 26, 2017
- Blockchain Startup Peerplays Raises $4m Before ICO Even Kicks Off - February 26, 2017
- Numerai Launches Cryptocurrency and New Hedge Fund Built By Data Scientist Network - February 26, 2017
- Disrupt the VC Industry? Brock Pierce and Blockchain Capital to Launch Own Cryptocurrency and ICO - February 26, 2017
- SoftBank, Sprint and TBCASoft Partner in Blockchain Technology for Telecom Carriers - February 25, 2017