Home Business Insights & Advice A new way to finance your business

A new way to finance your business

by Sarah Dunsby
28th Aug 18 9:37 am

Initial Coin Offerings are gaining a lot of popularity in the business world. This is a way in which start-up companies can gain capital to fund their businesses and investors can achieve above-average profits.

Initial Coin Offering (ICO), especially in the United States, is becoming a competition for traditional and new, but already practiced, forms of business financing.

Until now, companies in the EU, which did not lack ideas but did not have sufficient funds to start their businesses, usually had to rely on banks, credit funds or look for ways to obtain EU subsidies. Such methods have significant advantages, but from the point of view of entrepreneurs who are just starting out, they have not always been available and suitable in practice. In order to obtain a loan to finance an investment, a number of formal requirements need to be met. Meanwhile, companies at the beginning of the process usually cannot show the required credit history, they also lack the funds for the so-called personal contribution, not to mention for carrying out their business plan with their own cash reserve.

For similar reasons, the offers of credit unions, as well as EU forms of financing, may be beyond the reach of start-ups.

Businessmen, who have already made a profit, see this as an opportunity

It happens that owners of companies, that have already achieved success in business, invest their capital in the development of other business ventures. This has nothing to do with distribution or sponsorship for marketing benefits.

It is about investing in the purest form with a focus on profit. A completely new form of dependence has emerged in this area between the new companies and the world of finance. New, because it is based on cryptocurrency technology. This is what Initial Coin Offerings are all about.

Authors of business ideas present their white paper, i.e. documented data on the scope of the company’s activity. If it is interesting for investors, they buy tokens from young companies, for which they pay with cryptocurrencies.

What happens next? Beginners in business convert cryptocurrencies into traditional money. This is how they gain capital to develop their business. Investors, on the other hand, trade the acquired tokens.

The most interesting thing is that ICOs bring important benefits to both sides. Young companies can get capital for presenting an idea, while investors can achieve above-average profits. That was referred to in the report prepared by Boston College’s employees this year. The research shows that in less than three weeks investors earned on average 179% on their own contribution. It is even difficult to make a comparison here with the profits that give traditional forms of investment.

The chances of earning such an income means that the popularity in ICOs is increasing very quickly. It took less than half a year for the number of operations so far this year to overcome the total from the previous year. The majority of such projects is carried out in the United States. The largest transaction from last year was in the USA and amounted to USD 1.7 billion. This year, it has changed because of two very large ICOs, the Cayman Islands have come to the forefront, with the British Virgin Islands in second place. No country should push the US out of the top in terms of the number of ICO transactions (87) it carried out last year. On the other hand, the data from the first half of the year predicted a significant overrun of 100.

Investing without cryptocurrency technologies

Of course, young companies can look for investors in ways which do not even touch the subject or technology of cryptocurrencies. One of such methods is e.g. crowdfunding. This has developed considerably thanks to the use of social networking sites.

They are often used for contact between companies seeking capital and investors. Sometimes it can be about collecting small donations when benefactors don’t hope for a return, let alone a salary. On the other hand, crowdfunding also has the face of profit-oriented investments. Thanks to social networks, it is easier for business initiators to reach a wide range of potential recipients of their projects. In the age of the internet and common EU regulations, there are no problems with establishing the principles of remote cooperation, as well as with transferring money for investment. Conotoxia.com offers a mutually beneficial form of communication in the European Economic Area. Thanks to the service available here, https://conotoxia.com/money-transfer, you can transfer funds quickly, cheaply, safely and in any of 26 currencies to your business partner in 30 countries.

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