Blockchain-managed ICOs, crowdfunding set to ease fundraising among startups
Blockchain-Managed ICOs, Crowdfunding Set to Ease Fundraising Among Startups
Initial coin offerings (ICOs) are changing the game for startups that are struggling to gain access to financial resources for capital formation.
In the first half of last year, ICOs eclipsed venture funding among startups in terms of the amount of money raised. This made ICOs a viable approach for businesses to source financing. Meanwhile, crowdfunding is a less traditional financing campaign that has also been gaining traction for some time.
Today, the industry of tech startups is estimated to be valued at $325 million. This puts players pitting tightly against each other to advance in the market. And one of the biggest predicaments startups in general are facing today is the cost of setting up a business. Costs may include workforce pay, office space, an accountant, business insurance, and a new website, among others.
But with ICOs and crowdfunding, investors should consider their lapses in transparency. A blockchain empowered ICO and Reg. CF crowdfunding combination may resolve this. This seems to be the direction of one firm namely Digital Arts Media Network, Inc. (OTCMKTS:DATI).
In its core, Digital Arts Media Network sees the difficulty of private investors (angel and early-stage investors) in accessing funds hindering them from spurring the growth of their businesses. As such, the firm addresses this problem by expediting the release of funds; which for the average investor may not happen for several years.
Digital Arts Media Network is the first company to utilize the Public Accelerator-Incubator (PAI) model. The firm targets to service mainly the disenfranchised investor whose limited resources keep him from taking a share of the growing tech startup market.
Recently, it has revealed that it is in talks to acquire a stake in truCrowd as the crowdfunding portal is seen to boost the company’s potential for growth.
Digital Arts Media Network CEO Ajene Watson said the consideration of an acquisition in truCrowd is prompted by the success of StartEngine. The firm is registered at the Securities and Exchange Commission and is a FINRA member. StartEngine provides a crowdfunding portal where both accredited and non-accredited investors can pour out their money in potential high-tech startup businesses.
StartEngine is perceived as an accelerator in its infancy which is co-founded by Howard Marks, also the founder of Activision Games.
StartEngine has raised about $35 million for its clients and has an estimated valuation of about $65 million and leverages both Regulation D and Regulation A+. SEC Regulation D exempts smaller companies to raise capital through the sale of equity or debt securities without registering with the SEC. Meanwhile, a Regulation A+ is an alternative for smaller companies to go for an initial public offering.
Crowdfunding is a way of raising funds cumulatively from different groups. Such a strategy is perceived to change the landscape of funding businesses like startups which used to form capital from credit borrowing through banks. Referring to truCrowd, Watson said,“This portal will give us the framework to truly offer end-to-end services to those startup and early-stage companies seeking traditional but accelerated capital formation and/or that wish to fully and legitimately leverage the ‘crypto’ market space.”
This move, which has been in discussion for several months, is expected to effectively develop a compliant offering combining Reg. CF and the cryptocurrency markets.
“I strongly believe this portal will become a centerpiece of our business model,” said Watson. He noted that crowdfunding can initially fund companies, test a company’s popularity in the market, and support the launch of properly developed blockchain and crypto related companies and projects.
Now, in tandem with a crowdfunding portal, the firm is seen to position itself at a greater advantage in assisting a startup and early-stage company that is properly organized and operated with their development needs.