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It’s easy for traditional financiers to write off cryptocurrencies and initial coin offerings (ICOs); the SEC has repeatedly said ICOs are securities, can be regulated, and transactions that have already transpired may be riddled with legal holes. What many don’t know, though, is that the there is a new wave of ICOs coming in a few months that are fully SEC compliant, for well established, profitable companies, and have the potential to make traditional investors a ton of money
These new ICOs are called Reverse ICOS. Whereas regular ICOs are for unproven startups and avoid being classified as a security, Reverse ICOs are quite the opposite. They are intended for existing, successful midsize to even large companies that have been in business five years or more, and make $20M in revenue. per year, and are assumed to be securities from the start. They follow same prescribed pathways full public offerings, Reg A+, Reg D, and Reg CF, and requiring all the same audits, disclosures, prospectus, filings, etc. In other words, Reverse ICOs are almost identical to traditional IPOs.
So why do a Reverse ICO instead of regular IPO or Reg D? The answer is simple: there is a HUGE new pool of cryptocurrency investors who have tens of billions of dollars fresh winnings in their pockets. They love and respect American technology firms, but distrust traditional institutions. Reverse ICOs are a way of bridging that gap to provide these new wealthy investors a friendly way to invest in legal and high-powered deals.
More importantly, token-based equity combined with token economic modifications to company business models will offer significantly better valuation for the mid-size technology ventures not yet large enough for a traditional IPO, or larger companies that have not gone public due to the rising challenges doing so. Through using a Reverse ICO, an increasing number of companies can exit and create value.
Traditional IPOs are down a whopping 50 percent over the last two decades – leaving a large gap in the economy. If Reverse ICOs take even a small bite out of this lack of IPOs, it could have a huge impact on the economy as well as bolster the portfolios of many investors.
The benefits for non-traditional investors and the economy makes the Reverse ICO approach an inevitability. Performed within regulations and nearly identical to IPOs, jumping into the next wave of ICOs is a no brainer.
Tom Benson is CEO of Pathfinder Equity Systems. Pathfinder helps companies launch Reverse ICOs using artificial intelligence coupled to expert analyst teams, to create the optimal token economic designs and product/market fit, matched to the world’s top ICO investors.