ICOs add a unique selling point which was that anybody was able to invest in them. However, this advantage seems to be taken away. In many of the cases recently, it has been observed that the ICOs are not open to the entire range of investors. They are just open to the larger investors. This is causing the ICO to actually turn into IPOs.
Until 2017, anybody who has the minimum amount of investment could participate in the ICO. Also, the rules for allotting or getting coins or tokens in the ICO were pretty transparent as well. This was one of the main unique selling points of most of the ICOs. Since then, a lot has been changed.
ICOs turning into IPOs:
In many of the recent ICOs, it has been observed that the company is only allowing the tokens to the larger investors and actually canceling the crowd sale or the open offer. This is similar to IPOs where the stock is open mostly for the bigger investors rather than the smaller retail investors. Moreover, companies are going over the board when it comes to marketing as well as accommodating the interests of the larger investors as well. Thus, the offer is entirely different for the retail investors as well as the larger investors. This is leading to more heart burn among the retail investors as well.
Many times, the deals are being stuck behind the doors as well and therefore the terms and conditions of such deals are not transparent as well. The listed terms and conditions are not being honored as an extra discount is being given to the larger investors as well. Thus, the return on investment of the larger investors, as well as the smaller investors, is entirely different. This is causing the smaller investors to lose interest in the ICO’s as well.
Moreover, this kind of privacy where the smaller investors are not even able to know at what price, the ICO is coming out or at what price the private deals are being conducted is a bad sign for the ICO market. It seems like with increased participation from the retail investors, the companies launching the ICO’s would actually mature. However, with the big sharks coming into the ICO’s market, it is actually the opposite.
It remains to be seen whether the companies correct this in the future or whether this trend of private placement or opening up the ICOs for an only select batch of investors actually continues. image credit: themerkle.com