Historically, individuals or startups that were requiring funds for their venture would have to apply for traditional finance by presenting business and marketing plans as well as their available assets, in order to secure a loan for the bulk amount needed from wealthy individuals or institutions.
The process was cumbersome, lengthy and often ended in a smaller amount being loaned or not at all.
Crowdfunding has since created an online space where startups and entrepreneurs can gather fund for a project by getting public involvement and investment, therefore circumventing the previous archaic loan system. This system has seen many startups funded but also with little security for the investor and limited audiences.
The introduction of ICO has created a simpler, safer and more secure investment in worthy blockchain startups. ICOs offer digital currency instead of exchanging equity for funds money, they are issuing their own currency. The currencies can be bought by anyone in the, and the proceeds are used to fund their project.
Raising Funds in the ICO World Just Got Better
One of the most important factors of a successful ICO is the community on-boarding the vision of the project, and continuing through to using the tokens purchased for not only profit but as a utility.
Vertex has created a financial ecosystem that brings some solutions to the issue of stability and trust. By providing a platform that users in crypto can trust, beginner or experienced users will congregate in one place.
When Vertex purchases tokens of an ICO in pre- or private sales, the ICO gains access to a community of investors and traders that will be able to purchase the tokens at a preferential price. These tokens will be of an ICO that has been vetted by the Vertex team, and largely funded by Vertex. These users have already completed the KYC process too.
For startups, this is the perfect arena to gain access to a global audience of like-minded community members wanting to invest. They have already been vetted and are looking for opportunities that are not scams or weak investments.
Investors will look to Vertex as a guideline as to which projects to invest in as Vertex has employed stringent vetting processes. The trust, therefore, is a two-way street.
Differences and Why ICOs Pull the Rug
Some standout features make the two different from each other, and it’s worth taking a look at some of the areas where they differ.
One of the significant differences between these two avenues is accessibility. Crowdfunding has a limited audience in that it is region-specific and often confined to the country of the original founders. ICOs, on the other hand, are global and are without border restriction. Anyone globally can get invested in an ICO and will have sooner knowledge of new ICOs as they are more broadly covered on social media and other digital platforms.
Regarding product, crowdfunding is somewhat one dimensional. It wants to raise a certain amount of money to fund the project and launch successfully. ICO has a broader and more universal approach and product offering. The offering is technologically based and has much to offer in terms of future solutions, depending which ICO is invested in.
People who contribute to a crowdfunding stand very little chance of any payback. There are very little to no rewards offered other than a public shoutout or perhaps the promise of buying the original product at a reduced ‘reward’ cost.
ICOs, on the other hand, offer the prospect of making fantastic returns on investment into tokens. These tokens can also be used for a host of various services offered by the platforms for which you will be able to exchange your tokens for.
Conclusion
As time goes by and the range of available services by dynamic ICOs grow, we may find that crowdfunding becomes the dinosaur that seems to be the current loan system through traditional institutions.
The future is extremely exciting for those looking to fund new projects using initial coin offering processes, and now with the guiding hand of a unique platform in the form of Vertex, investors are assured of a stable and fruitful investment, whereas startups are able to come to a place where there are a pool of investors waiting for new opportunities.
