Disillusioned Investors Ponder Risks Involved with ICOs

Investors passionate about blockchain technology keep complaining about ICO’s results. They are quite frustrated with a tangible lack of progress on the management of professional risk strategies all over major token projects.

The founder of Athena Capital and chief strategy officer at startup CoinShares, Meltem Demirors said: “A lot of the projects that raise money, they’re not really reporting what they are spending it on.” “I don’t think you can responsibly talk about investing without talking about risk management.”

Demirors might sound quite critical, but her thoughts go along with other investors in the space, who have all been complaining about the management of companies and teams that raise funds from initial coin offerings (ICOs).

The ongoing grumbling attitude of investors has in no way slowed the race to get involved, as more than $6.3 billion were raised through ICOs during the first quarter of 2018 only; a sum which is already higher than the total amount raised by token sales in 2017.

Against the scenery, veteran cryptocurrency investors are questioning whether many of these tokens really add value compared to what is considered as traditional venture capital.

Jalak Jobanputra, the founder of Future\Perfect Ventures said: “what I worry about is, we still need to work out governance models with tokens.” She says it is safer to stay with equity, even though she really can’t tell what ownership, rights or utility the tokens represent.

She said, “we know equity works. It’s a proven model with governance.”

As pointed out by Jobanputra, few projects that raised money in 2017 have proven the real value of their tokens by launching usable platforms. She said; “I want to see them [token sale projects] start shipping products.”

Investors like Jobanputra prone progress reports, even at this early stage.

“The projects we’ve invested in have reporting on par with startups I invest in, which [means] monthly updates on tech, team, [business development] and market progress,” she said. “Successful founders have found that it is also a great way to enlist the collective investor network for help.”