2017 was a ridiculous time in the crypto asset market because so-called utility tokens were being created left and right with no real purpose. During this hysteria around initial coin offerings (ICOs), many projects were pressured into launching their own tokens in an effort to raise more money than would likely be available through traditional avenues of investment.

At the recent TABConf 2019 event in Atlanta, Georgia, three crypto CEOs shared their stories of resisting pressure from investors and elsewhere to conduct an ICO.

OB1 Pressured to ICO

When an audience member asked a panel of crypto CEOs to comment on how the ability to raise money for their businesses has changed since the early days of Bitcoin’s development, OB1 CEO Brian Hoffman, whose company works on the OpenBazaar protocol, was quick to bring up the weirdness around the ICO bubble.

“[Our investors] started very quickly changing their tune and heavily pushing us and encouraging us to consider the ICO model,” said Hoffman.

OB1’s investors include some of the most well-known venture capital firms in Silicon Valley such as Andreessen Horowitz and Union Square Ventures. According to Hoffman, OB1 was the only crypto company in Andreessen Horowitz’s portfolio that didn’t do an ICO.

“Blockstack did $50 million, Protocol Labs did $250 million, [and] Kik with Kin — it just goes on and on. And we’re the only ones that didn’t do it,” said Hoffman.

Hoffman added that OB1’s refusal to do an ICO made it extremely tough on them during their Series A funding round. Having said that, the OB1 CEO added that their investors have now changed their tune and realized maybe it wasn’t such a bad idea to skip out on the ICO hype.

https://www.youtube.com/watch?v=fn6ztH6qNdw

Bitpay and Edge

After Hoffman told his company’s story, Bitpay CEO Stephen Pair explained that his company felt similar pressure from some of their investors.

“It’s funny you talk about the ICOs because we got the same pressure from a couple of investors that wanted us to do an ICO, and I’m glad we didn’t for the obvious reasons. But the less obvious reasons are that, once you’ve done an ICO, there are all sorts of questions about: What’s the liability there that you have to those holders of your token? How do you value that? So, if you’re going to do later rounds of funding, that becomes a very, very complex question to answer.,” said Pair.

Edge CEO Paul Puey added that his company also skipped out on the ICO mania, although they did conduct a more traditional equity crowdsale.

“We kind of asked ourselves: Is an ICO proper for our product? And for some products it is, and for some products it’s not. We kind of said to ourselves we’ve got three choices with an ICO: have a product that does fit, have a product that doesn’t fit and you hinder the product (you make it worse by requiring a token inside of the product), or you kind of really just make it an equity and you go to jail,” explained Puey.