INSUBCONTINENT EXCLUSIVE:
What does a startup do with $48 million $130 million$1.7 billion This question – one integral in the whole ICO craze – hasn’t quite
been answered yet but it’s going to be far more interesting as ICOs and cryptocurrencies transform from purely product-oriented companies
into actual funds.Take the news that the creator of the TRON token bought BitTorrent for $140 million purportedly to lend legitimacy to the
“One shareholder we spoke to says there are two plans,” wrote TechCrunch’s Ingrid Lunden
“First, it will be used to ‘legitimize’ Tron’s business, which has met with some controversy: it has been accused of plagiarizing
FileCoin and Ethereum in the development of its technology
And second, as a potential network to help mine coins, using BitTorrent’s P2P architecture and wide network of users.”Given a $4.8
billion market cap, the cost of buying a beloved network brand, even one as tainted by controversy as BitTorrent, is miniscule
Further, it allows TRON to fill its war chest with solid businesses even as its own efforts end laughably with ham-handed announcements
about non-existent partnerships and failed pumping by the idiosyncratic John McAfee.In short, all of those massive ICO raises aren’t going
to Aeron chairs and food truck rodeos in the company parking lot
Those smart enough to machinate their way into an ICO raise aren’t interested in product, no matter what they claim
They are interested in becoming investors, gobbling up products and people in order to gain a stranglehold on the space
Further, these ICOed organizations are often already registered as broker-dealers in various jurisdictions and have all of the legalities in
place to take and invest large sums of cash
In short, if you think any successful ICOed company will deliver actual product before it would buy itself into multiple iterations of that
same product I have a few tokens to sell you.Startups start small for a reason
None of the current crop of successful ICOs have any technical merits, no matter how dense their white papers
While PhDs and computer scientists have great ideas, ultimately their ideas fail when dashed against the realities of the market
Most startups die because they are underfunded but they are underfunded because the risk associated with their ideas are far too high to
ensure a win.ICOs on the other hand are wild bets that a person who is connected to the crypto space will know better what to do with
unearned crypto riches than the owners of those riches
It is a bet that the ICOing org is willing to work a little harder to make 10,000 Ether or a few hundred Bitcoin pay off in the long run and
it’s a bet that the congregation of all that crypto wealth will bring the true sharks out to help turn a small investment into a big one
And you never get rich releasing a single product
You get rich buying and controlling multiple products.The other important consideration VCs will soon find themselves fighting for deals
While it won’t happen soon and perhaps the big houses won’t feel it at all, expect smaller VCs to lose LPs as those LPs dump their cash
into Maltese ICOs and not Sand Hill Road
It’s an interesting and overdue turnaround.So don’t expect these ICOed companies to invest in fancy offices and ping pong tables
(although they will.) If you’re a startup founder expected these ICOed companies to invest in you.
