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With the recent influx of both successful and unsuccessful Initial Coin Offerings (ICO) these past 2 years, many among them have been passed off as scams, while “legitimate” ICOs are struggling to maintain visibility. Should they fail, adopters would be hard pressed to recover their losses with a dead project, especially so for Venture Capitalists(VC).

The Blockchain road mapping so far

We’ve all read the whitepapers and road maps of blockchain projects. Something like this will look familiar.


Over the past 2 years, investors and adopters were left at the mercy of whatever information that was available in the white paper before investing, along with faith in their team in order to get said project off the ground.

The Dilemma

The problem with projects like the above would be that the level of risk is significantly higher for investors, especially so for VCs.

At the Singapore Week of Innovation and Technology (SwitchSG) 2018, VCs and entrepreneurs alike are beginning to look past the hype and question the way, or rather, the sequence of which the funds are being raised.

At a panel discussing how companies are using Blockchain technologies in Asia, it was agreed that a more traditional model of funding would be preferred. Meaning to say, proof of concept product/service first, fundraising later.

Perhaps is it through the “traditional” lens of operating that the VCs acknowledged this disruptive tech in within the past decade.

With ICOs, the power is in the hands of the general population to dictate the type of products they want to see in the world. Funding can now be sourced from interested parties internationally.

This puts a damper on VCs where their interests and agenda carries less weight in negotiations than they used to. This may very well be one of the reasons that VCs feel uncomfortable with Blockchain companies.

Does this mean that VCs will shun Blockchain companies?

Definitely not! There are many Blockchain companies out there that are working on products and services that are not operating with ICOs or token offerings. Instead, they focus on the traditional funding methods, while using the Blockchain tech and consensus algorithms as their internal platform.

If you are thinking of doing a start-up with Blockchain, perhaps this model is the way to go.

The Blockchain funding ecosystem now

For now, the hype and fast funding of the initial Blockchain “Gold Rush” seem to be subsiding. Perhaps a different funding model will appear in the next months that will satisfy a wider range of investors.

Only time will tell.

 

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