Why ICOs & STOs Are The Future of Investing for Startups

 

Startup companies can raise a lot of money through Initial Coin Offering (ICO) investments. With over $13.6 billion raised already since 2018, ICO is the future of fundraising. With such significant growth in the industry, many investors are taking an interest in ICOs.

ICOs are great ways for new companies to raise funding for their planned projects. Unlike other methods of raising funds, ICOs allows startup companies to avoid the usual legal and regulatory compliances that companies need to conform to when fundraising. The way it works is by allowing investors to buy a certain amount of crypto tokens created by the startup company for a fixed price.

When the company finally delivers its product or service, the investors can use these tokens on the product that was created by the company.  The incentive for investors is that if the company does well, these tokens will appreciate in value, making their investment profitable. This way startups get a quick source of funding and investors to have the opportunity to make money from potentially good investments.

Similar to ICOs, Security Token Offerings (STOs) is another way for investors to invest in a company. However, by having their value based on physical assets, STOs are more regulated and must comply with the United States Securities Law. This means they are more secure and are credible investments. But what is it about these tokens and coins that make them so successful and appealing?

 

They Keep Attracting New Investors

ICOs are growing rapidly, and the amount of money being invested in them are attracting new investors. With the lack of proper regulation, many startups are using ICO as a way to raise capital, rather than selling shares of their company in order to fund growth. As the number of new companies looking to sell ICO tokens increase, investors need to change the way that they invest if they want to profit off of innovative new companies. This is why ICOs are attracting many investors. Many of the good companies to invest in have switched to selling tokens and the only way to get a piece of the action is to buy their tokens through ICO investments.

Even the more cautious investors can still benefit from all the perks of ICO investments by purchasing STOs instead. As STOs are more regulated and secure than ICOs, investors can be reassured that the new company they are investing in is legitimate.

 

It Makes Startup Projects More Likely To Happen

Both STOs and ICOs have an advantage over traditional shares as they are selling tokens rather than a percentage of their company. Startups can produce much more tokens and still sell them at a low price since the number of tokens purchased does not affect their overall company ownership shares.

Low token prices also mean that many more people can invest in the same startup, increasing the probability that a project will raise the required money and be kickstarted successfully. Investors also benefit from being able to access the products created by the company and have the potential to profit if the company’s value increases. With the popularity of these investment options increasing, experts predict that the amount of capital ICOs could raise will soon triple, while that of STOs will double.

 



Author: STO Search & Filter
STO Search & Filter is an online resource for the security token community and investors. Launched in Bangkok, Thailand in 2018, the website now caters to a global audience offering users a gamut of information regarding to the security token industry. Users can view active, upcoming, and historical offering information on the homepage, contact STO service providers on the STO Industry Directory, debate security token topics on the STO Fireside Forums, and catch up on industry interviews within the news & resources section.
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