This modern world accepted blockchain technology as a revolutionary technology, and we couldn’t deny it. Widespread by-products of blockchain are cryptocurrencies and NFTs. This distributed ledger technology has sparked the idea of digital fundraising models such as ICO, IEO, STO, and more. These crypto crowdfunding strategies lay the foundation for endless business opportunities for startups and entrepreneurs.
Luckily, we have practical launchpad development Services providing agencies to make crowdfunding more feasible. But, it was not the same case in the past. Let us explore the past and present of enterprise crowdfunding methods.
The History Of Enterprise Fundraising
Before cryptocurrency-based crowdfunding methods stepped into the playing field, fund-needing enterprises used IPO. We are unsure whether you are aware of the hurdles involved in this fundraising process.
Project approval itself will take months. An individual who is interested in launching IPO will get invited to pitch several presentations about their project idea. After a prolonged period of time, the idea will get evaluated and approved. The IPO will hit the stock market floor only after all these processes.
The pain point of IPO made entrepreneurs get potential investors for their companies. There arose a revolutionary idea that simplified the fundraising process drastically.
ICO – The Game Changer Of Fundraising
ICO is widely known as new age IPO. Unlike IPO, the level of regulations and restrictions are way lesser here. Undoubtedly, ICO turned the crowdfunding approach upside down.
In 2015, Ethereum introduced the ERC20 token standard (Fungible tokens). It allowed enterprises to use these tokens as leverage and raise capital for their projects. This helped many new companies to collect sufficient funds and take their business to the next level. Moreover, ICOs are cheaper and non-regulated than traditional IPO.
But the real issue with ICO is that it paved the way for scammers and fraudsters. Reportedly, most of the startups dropped their project after the ICO completion, and some businesses sold their ideas to established companies.
STO – The Final Product
Due to continuous project dropouts, many investors fled the ICO investors pool. Lack of DYOR and unwanted hype over a project were the other causes for the failure of ICOs.
Now, STO has come into existence and concealed the flaws of ICO.
Unlike ICO, STO is regulated and has multi-layer security and verification to ensure the authenticity of a startup idea. This crowdfunding model is backed up by Securities law.
STO tokens emerged as a frictionless and trustable fundraising model for startups and entrepreneurs. They increased the liquidity of the token without causing any risk to investors. STO is reliable, regulated, smooth, affordable, and transparent. Thus, the capital raised using this method was considerably high.
Conclusion
Some people believe that STO is a combination of ICO and IPO. We can neither deny nor agree to it. However, the blockchain ecosystem is somewhat unpredictable and ever-changing. So, it is impossible to predict the future consequence of both ICO and STO based on the present conditions.
Above all, it all depends on the launchpad development company you approach. If your service provider is a professional, then your idea will go places.