
How Blockchain and ICOs Are Changing the Funding Game for Startups - smokielad
https://www.wsj.com/articles/how-blockchain-and-icos-are-changing-the-funding-game-for-startups-1506304861?mod=rss_Technology
======
CharlesDodgson
I'm not a lawyer, VC investor, and have never started a tech company, however
I am a little concerned about this as way to run a start up and raise funds,
feel free to call me out if I'm way out. I try to keep up to date on these
things. Firstly, it seems a massive distraction. If you have a good idea or a
good project and you only have a small team of 4-5 people, dedicating
significant time to building out a blockchain solution to issue coins for an
investment, is a major distraction. Maybe that's not how companies think
nowadays. I always figured you focus on your strengths and the nugget of an
idea that prompted you to make the leap to set it up as a business.

I can see that ICOs do have a lot of benefits, particularly answering the
concern that are raised by bitcoin, they are trying to assign a value to a
cryptocurrency, although trying to assign value to a start-up requires a level
of understanding about the company and it's operations, projects, and dealings
that I can't imagine every possible buyer and seller of the currency would
have access to or be able to digest.

This kind of brings me on to my second point, I feel a lot of VC activity and
the way the community operates, is designed to hide and make you feel there is
something more at play than it just being an club of people who went to the
same MBA schools, know each other, and like the same wines. Although, I can't
help but feel that VCs are generally in it for a longer game and analyse a
company in a very different way than your average domestic investor. I wonder
how many ICO investors would of stuck with Amazon when it was bleeding money,
establishing a toe hold in the market. I also think connections through a VC
can be useful. You may lose equity, but it's not that every ownership dilution
the founders take on will be a bad one.

Thirdly, I'm thinking about security, the validity of the ledger in a
blockchain is controlled by what ever the decision is by 50% of the
maintainers of the blockchain, now if you have a small startup and a few
thousand ledger maintainers, you are a bit of a target when it comes to
exploitation. Maybe I'm wrong on this, but could, by ledger manipulation a bad
actor hijack the ownership of a company by reassigning coins.

