The connection between startups and investors go way back in time. Entrepreneurs have always been approaching investors to raise the required capital to run their business in exchange for a certain percentage of equity. On a later stage, they go public with an IPO, issuing shares that can be bought, sold and traded over exchanges. But such an investment model is gradually being phased out by the new-age technology startups.
Cryptocurrencies and blockchain technology are now some of the hottest technology segments, and startups working in these sectors are making use of the very technology to raise funds from the public.
The concept of Initial Coin Offering (ICO) or crowdsale has become famous in the recent years. The easy of creating, transacting and exchanging crypto-tokens. And the use of smart contracts to assign various functions to the token holders has further encouraged these businesses to rely upon the community to raise the much-required funds for product and business development.
The ICOs, which are similar to crowdfunding involves people (investors) buying tokens with either fiat or other well-established digital currencies. These tokens will act as shares, entitling the token holders to certain rights/control over the platform’s future. Meanwhile, the token holders are free
Read more ... source: NewsBTC USA
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