Despite the focus on cryptocurrency, investors are bullish


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 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.

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