ICORA, a consulting agency for initial coin offerings (ICOs), has introduced an innovative method for tech start-ups as well as small and medium enterprises (SMEs) to raise funds for their enterprises.
Icora’s advisor Dr Santitarn Sathirathai said at an event on ICOs and crypto-currencies last Wednesday that the ICO method is still new but has a strong potential to meet the needs of entrepeneurs in Thailand and other countries.
According to Dr Santitarn, ICOs are similar to crowdfunding and blockchains are used to keep transaction records.
For most start-ups and SMEs, they have found it difficult to borrow money from traditional banks and financial institutions which would generally require collateral to back their lending.
Start-ups and SMEs with a promising business model may also turn to venture capital (VC) funds, but that is not possible in the early stages of their enterprises.
When the promising start-ups and SMEs reach the advanced stage, they are then attractive to VC funds which would then come in and put down a lot of money to finance these enterprises’ expansion in return for significant ownership.
The ICO method is however different and can address these funding challenges currently faced by entrepenuers since business founders and original owners will get money they need while retaining their ownership provided that the promising business models.
According to Icora, ICOs are also a revolutionary approach to smart investing as the consulting agency aims to help qualified companies take advantage of the new fund-raising method by properly structuring and enabling token sales campaigns for investment into companies which it deems have viable business models.
“We address the market gaps of token sales creditability, valuation inflation, and regulatory risks by working with accredited accelerators and venture partners,” Icora’s website said.
After selecting and conducting due deligence on promising start-ups, the agency does in-depth reviews with the short-listed to ascertain business viability and to structure the business terms for ICOs.
The next step is to build the final terms and conditions into digital tokens or smart contracts and then generate the tokens as required by the ICO candidate. Afterwards, there are ICO announcements and launches with roadshows to engage the investor community.
At this stage, the Securities and Exchange Commission (SEC) is gathering industry opinions via public hearings before it comes up with rules and regulations on ICOs.
Icora’s CEO and co-founder Dr Karndee Leopairote said there are still misconceptions regarding ICOs, tokenisation, crypto-currencies, Bitcoin as well as blockchains.
In this context, some people see Bitcoin and other crypto-currencies as part of the gambling industry, underground economy and money-laundering networks.
Due to the latest hype of Bitcoin and other digital currencies, South Korea, for example, is considering to levy a tax on the trading of all crypto-currencies to curb speculation and prevent potential damages on investors.
There are currently several types of digital coins, which are just electronic files whose transactions are recorded on the blockchain. First, utility coins are similar to e-coupons which can be redeemed for goods and services.
Second, security coins have underlying assets or business models which generate a share of profits for owners/investors as in the case of ICOs which are expected to be issued by start-ups and SMEs in the near future.