Should you be using an ICO?

With several options to raise funds for a small business, how does an entrepreneur determine the best course of action to ensure their ventures succeed beyond more than just a dream? To expand a startup, business owners may consider bootstrapping (self-financing), taking out a short term business loan, or leveraging the boom of cryptocurrency by launching an ICO to raise capital.

An ICO, short for Initial Coin Offering, is a method of fundraising that involves a startup selling their own crypto tokens in exchange for other forms of cryptocurrency, namely bitcoin or ether.  Essentially the crowdfunding of cryptocurrency, using an ICO to raise capital can be a viable option because campaigns are easy to launch and allow company founders to retain full ownership of their businesses. Entrepreneurs need only to create a white paper outlining the project for investors before selling the underlying crypto tokens, making it a simple process that virtually anyone can participate in.

For all its benefits, however, ICOs do bear significant risk as they aren’t subject to heavy regulation and are often prone to failure. Startup founders should bear in mind the pros and cons that come with using an ICO to fundraise before commiting to this method of fundraising.

To learn more about using an ICO to raise capital for a business, check out the infographic from Fundera below.

Please include attribution to Fundera.com with this graphic.

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