However, the fact remains that ICOs are here to stay; of course, the industry will still need to go through the birth pangs of deeper regulatory oversight, demand for increased transparency, and prosecuting of unscrupulous founders. This piece provides insight into how existing companies are injecting a measure of confidence into the ICO industry.

Traditional firms are adding legitimacy to ICOs

ICOs are here to stay and there’s not much that traditional institutions can do to stop it – of course, governments can always find ways to regulate the space. ICOs make it easier for entrepreneurs to raise funding for their idea – and that, in a world where it is increasingly hard to sell new products and services. For existing businesses, however, ICOs represent a smart way to raise funding with the Ethereum smart contracts that differ the coin from other cryptocurrencies such as Bitcoin, ripple, etc. Without giving up equity or subjecting your company to the scrutiny required for public companies. Investors in an ICO, while not necessarily getting equity in utility tokens, also get a first-mover advantage to buy such tokens at a discount before the forces of demand and supply determine their fair market value.

Choosing the ICO route is smart because crypto investors are more willing to fund ideas than Wall Street investors. In Q3 2017, the number of ICOs totaled 1,602 whereas the number of angel and seed funding for tech startups was 150.

Interestingly, some existing traditional companies are choosing to ignore Wall Street to raise fund from the cryptocurrency markets through the instrumentality of ICOs. When people think ICOs, they usually only think about startups, existing companies can leverage ICOs access capital to pursue expansion into new markets, new product categories, or pivot into an entirely different business model.

ASK.fm, the largest question and answer social network in the world is another existing company that wants to pivot to a blockchain-based business model.Ask.fm is reportedly pushing for an ICO as it seeks to transition into the world’s first incentivized, decentralized Q&A social network. ASK.fm wants to build a platform on which users are rewarded with tokens for providing quality content. Instead of being an ad-supported site or using a freemium model, ASK.fm wants to use blockchain technology to create wealth on its platform with a game theory mix of token incentives and influencer reputation.

The Telegram ICO is the most popular example of an existing company leveraging blockchain technology to access fresh capital. Telegram’s ICO story is the stuff legends are made of – the firm initially raised $850M from 81 selected investors during its presale; then it went ahead with another round of presale in which the total amount it raised surged to $1.7B. The presale was a massive success such that Telegram didn’t even bother about pursuing a crowd sale.

Kodak is another existing company planning to launch a blockchain-based image rights platform called KodakOne. The firm has already raised $10M in the pre-sale rounds of its Kodakcoin and it is on track to raise another $50M in its crowd sale. Kodakcoin is particularly interesting in that it hasn’t been determined yet if it is a token or a security. The firm is leveraging the Simple Agreement for Future Tokens (SAFT) model that gives buyers the right to a certain number of tokens at a future date.