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For decades, the path to success for start-ups has been clear: to raise money from venture capitalists and start trading in public markets or selling to a bigger competitor.
These days, however, there is a lively alternative that brings ever-increasing promises: the initial offer of coins, or I.C.O.
Companies no longer have to sell their own shares to large investment companies. The token offers allow start-ups to go directly to individual investors on the Internet, selling Bitcoin-like digital currencies that can be used for some services that companies build.
The field for such offers: eliminate the hassle of dealing with venture capitalists and investment bankers, while avoiding the large number of regulations that accompany traditional initial public offers. In the best case, supporters argue, money supply is much more democratic than previous ones.
But while I.C.O.s has become a growing business – the only Russian messaging service Telegram has raised nearly $ 2 billion at the start of this year – skepticism, particularly by regulators wishing to repress what they consider to be abundant fraud, has thrown clouds on the most fervent expectations on the new way of raise funds.
"I am very concerned about the lack of transparency, supervision and responsibility that these companies have when they are going to raise capital through an I.C.O." Adena Friedman, the Nasdaq CEO, said at an industry conference last week.
And the Securities and Exchange Commission has carefully examined these offers, sending court summons to several such agreements, even though officials say they remain open to the fundraising concept.
What is indisputable is that the coin offerings are rapidly growing in popularity. About 309 offers were organized this year, an increase of $ 10.3 billion, according to the data provider TokenData, compared to 77 offers that raised $ 1.2 billion in the period of last year.
This is recovering the amount of money raised by the first public offers, in which companies hire investment bankers to help sell shares to investors and trade in public markets. I.P.O.'s in the United States has raised $ 15.6 billion in the first three months of this year, the largest quarterly pay in three years, according to Renaissance Capital, which tracks I.P.O.
But many entrepreneurs say they believe that, at least for them, coin bidding makes more sense as a way to raise money than the old ways of Wall Street and Silicon Valley.
The attraction for some companies is simple: it is a potentially larger version of a Kickstarter campaign, which collects money from supporters without giving up voting control by selling shares. The tokens that investors receive differ from traditional company shares as they do not offer any voice about the way the company is managed, so buyers are betting that their value will increase with the increase in the use of digital currencies.
And the process of selling a coin offering is relatively simple, in which companies create their cryptocurrency, write a document known as white papers to describe the service they are building and hope that enough people are interested purchase in the sale.
However, other entrepreneurs have seen something much more interesting in I.C.O.s.
For Ted Livingston, the supply of coins was just what he was looking for. His messaging service, Kik has grown steadily over its nearly ten-year existence, but has no hope of displacing rivals like Facebook. And Mr. Livingston has no interest in trying to make money from advertising sales, as does much of the social networking industry.
Trying to sell it to public investors seems unsuccessful. But a supply of coins could allow Kik to create his own token and sell it to supporters, who will find and create uses for this in the company's ecosystem.
Last year, Kik has sold almost $ 100 million of his token, known as Kin.
Mr. Livingston said the hope was to create an entire Kin-based digital economy, with his company betting on its cryptocurrency holdings that were eventually swelling in value.
"Your value at the end of the day is how valuable it is to multiply the resource by the amount of the asset you own," he said in an interview.
This view is picked up by other token sales supporters, such as Chris Dixon of the venture company Andreessen Horowitz, who argued that coin offerings are a way to encourage users, developers and service providers to grow the platforms on which these tokens live.
However, the ease with which companies have been able to raise funds has worried critics, who claim that too many offers of coins are essentially scams. Many of these offers, say the skeptics, offer so little documentation to launch a myriad of red flags.
"It's a little funny how revealing is poor," said Matt Kennedy, an analyst at Renaissance Capital. "He says you can not trust anything in this prospect until the full extent of the law."
Even the offerings of companies known as Telegram are for services that are far from completion, leaving many participants in these offers that essentially serve as speculators – and losing if the products promised by sellers fail.
The coin industry also waited for regulators to repress sales as well. China is among the countries that have banned these agreements outright. And Jay Clayton, the president of the S.E.C., testified that most of the I.C.O.s should have been registered as an offer of securities with regulators, which would have subjected them to a much deeper scrutiny.
Then there was Centra, a start-up promoted by boxer Floyd Mayweather Jr., whose founders, Sam Sharma and Robert Farkas, were arrested in April. In his case against men, the S.E.C. he claimed that Sharma and Farkas have deceived investors.
It is that kind of behavior that pushed Ms. Friedman, the Nasdaq CEO, to say that money supply poses real problems, particularly to the average investor who tends to participate in it.
"In order not to make them rules at all, when companies can only take money away and do not offer any information, without any governance, it seems to me that you are taking advantage of people," he said last week.
And some skeptics say traditional methods of fundraising for companies will last. Neil Rimer, a co-founder of the investment company Index Ventures, said that traditional venture capital lenders could give entrepreneurs experience and business relationships. The biggest technology treasures, including Uber and Airbnb, are still planning to hold huge initial public offers as soon as next year.
There is another potential problem for initial coin offerings: through more regulations and the entry of established investment giants, such agreements seem less and less like the democratic offerings that their biggest fans say they are.
For example, Telegram's successful supply of coins was limited to well-known and sophisticated companies such as Sequoia and Kleiner Perkins.
Nevertheless, Mrs Friedman did not rule out that one day the Nasdaq would exchange cryptocurrencies, like those sold in coins, one day. And even investors who have looked critically at this type of agreement recognize that for them there is a use.
"Our feeling is that this is an idea and a technology too powerful to try and cancel," said Mr. Rimer. But, he added, "the regulators need to find a way to live with it and to put a picture around it to avoid striking explosions".
