Cryptocurrency Token Fundraising Model Didn’t End Venture Capital, So What’s Next?


The ICO industry flourished in 2017, raising $7 billion. In 2018, the industry continued to grow, raising $20 billion. Such growth, while good for those holding the ICO, put significant fear into those in the venture capital industry, as many within it saw ICOs are a major disruptor.

But, various occurrences in the venture capital and cryptocurrency industries are showing that it may not be the end of the venture capital industry. Even though the cryptocurrency industry is changing – some platforms are cutting costs by laying off workers and are struggling to find financing – and such moves may bring greater stability and legality. At least, according to Vinay Gupta, an ethereum developer.

As Gupta stated,

“Some of those projects are very successful, some aren’t, but they all should have been properly regulated securities form the beginning because they were raising money directly to the general public. The governments didn’t go away, the intent doesn’t exist in a separate dimension, there was always going to be a settlement with regulators, and what will come out of that as a correctly regulated token economy next year, the SEC will define these things as not ok.”

These circumstances may lead to a “rebirth” in the venture capital industry. Jamie Burke of Outlier Ventures stated that it also depends upon the types of projects one is talking about. For example, if you are referring to protocol and infrastructure, it can be tokenized and it will have powerful network effects. On the other hand, financing networks like venture capital systems can have an in when there are hybrid projects or platforms need to raise funds through equity.

Gupta believe that there is also a role for traditional venture capital fund raising in the crypto space. He stated,

“Traditional venture money is important because [VCs] put a lot of skill on the stable. The kind of scaling that we’re expecting to see over the next year or so are much more like the kind of things that you see on traditional venture because some parts of what we do are very much jurisdiction by jurisdiction. IT’s not just you stand up the network and you go.”

Essentially, venture capital is still an integral part of the process, even though there are companies out there that raise funds through token sales. A panel featuring Gupta and Burke, among others, discussed these issues.

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