The world of venture capital investment and cryptocurrency is evolving every single day. In the last months, many crypto and venture investors got a new tool to purchase projects at the initial stages of development, or perhaps in large projects with stable cash flow. IEO – Initial Exchange Offering became a panacea after ICO, which compromised itself because of the large amount of scammers and individuals willing to profit from other people’s money. By the beginning of May, several IEOs were held on different exchanges, let’s see if it is worth participating in this?
The incentives for participation in IEO among small companies and giants are very different. Small startups that previously tried to enter the ICO may be interested because of the following reasons:
- There isn't any need to develop a smart contract
- Additional advertising among the customers from the exchange, that is conducting IEO
- The capability to attract initial investment in a short time and assess the interest in the project.
- The capability to attract business angels with no roadshow.
But it is not as simple as it appears. IEO is a reasonably expensive story, and its price depends heavily around the exchange which you decide to place. The price of IEO on major exchanges ranges from $ 150,000.00 to One dollar,000,000. At this time, the work raises a reasonable question, is it worth paying that kind of cash? It is difficult to reply to this unequivocally, however it should be borne in mind that no one exchange can promise you fees regardless of the price of listing. There is a certain clientele, but if you want to really collect effectively, then without the support of the community you've got nothing to complete. Therefore, in case your finances are limited to Thirty dollars,000.00- $ 200,000.00, it is best to decide on the listing around the exchange of the top 100 having a listing fee under $10 000 and send the remainder towards the marketing promotion of the project.
In the prior paragraph, we reviewed the problem using the report on medium-sized projects which have a limited budget. The situation with infrastructure projects is quite different. As an example, have a building that has a stable cash flow from tenants. Owners have a desire to invest in a new project, but there's no possible ways to sell the building entirely, or there is no desire to sell one apartment inside. IEO is the greatest fit for this type of business. Small investments in marketing, coupled with the fame of the object and the potential need for many landlords to enter a little proportion, will ensure stable interest in issued tokens. The tokens will have a stable and clear income, that will ensure a continuing demand for them, and through some projects market participants might even begin to hedge, since the BTC or USDT rate has no effect on the coupon paid.
There is a fear of falling under the law on securities in startups and large projects. This fear is justified if you are going to shake people down for some cash in the long term. If you, like a project, fulfill your obligations and recorded in most documents that tokens are members of your company, then you will have no problems.
Summarizing all the above, we can draw several conclusions.
- Often creating your personal community and investing in your own promotion is a lot more profitable in the medium and long-term than buying traffic from large exchanges.
- IEO may be used not only for crypto projects but in addition for traditional startups, as there is no need to understand the blockchain.
- In the near future, a sizable business will appear which will enter the investment market through IEO because it is less expensive and much more simple than entering the IPO.