USV’s Fred Wilson: ICOs Won’t Displace VC Investors

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Venture capitalist and Union Square Ventures co-founder Fred Wilson is not involved about preliminary coin choices, or ICOs, disrupting his line of labor.

In a new blog post, Wilson – whose agency has invested in startups like Coinbase, Blockstack and Mediachain, in addition to token hedge fund Polychain Capital – opined in mild of the lightning-fast token providing performed by bitcoin browser startup Brave.

The ICO mannequin – via which startups can entry funding by promoting tokens through a blockchain community – is a dominant topic within the area immediately, given rampant speculation within the open markets (although others argue that the mannequin largely fuels fraudulent conduct towards unwitting buyers).

In his weblog, Wilson opined that some observers see the rising variety of ICOs as proof of “the end of the hated VC era of startup funding”. He pushed again on this notion, arguing that, for startups, enterprise rounds and ICOs can serve equally invaluable and distinct functions.

Indeed, USV itself has a number of startups in its portfolio which have pursued the mannequin, and in keeping with Wilson, others are set to comply with. But he went on to say that “not every company can do an ICO”, arguing that they’re “about an entirely different business model” somewhat than a method to boost cash.

“The token that you sell in your ICO is the atomic unit of your business model,” he wrote. “You are selling some of it to raise capital but the main purpose of the token is to monetize your product or service.”

Wilson additionally argued that, in contrast with a token holder that may not be round for the long-term, some VCs are there to do exactly that. And whereas he acknowledged that, in his view, ICOs characterize “a legitimate disruptive threat” to the VC mannequin, “they are not something I am nervous about and they are not something USV is nervous about”.

He went on to say:

“We are excited about them when they are the right thing for our portfolio companies and we are encouraging those companies to use this new approach.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which as an possession stake in Brave, Blockstack and Coinbase.

Image through Flickr

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