The reverse application of initial coin offering (ICO) offers a kind of crowd funding for companies not wishing to go public, and keep risks at bay, according to the latest advice from Deloitte Hungary.
The standard function of an ICO is usually a combination of crowd funding and initial public offering (IPO). With ICO, individuals can fund a project in its infancy, or a company during its launch phase. This approach requires a large amount of trust from the investors, as even the most careful approach comes with significant risks, due to the lack of regulation, Deloitte cautions.
Gábor Kóka, Deloitte Private Hungary’s lead partner explained the advantage of reverse ICOs. “With the help of the so-called ‘reverse’ ICO, one can decentralize and provide a new market source apart from IPOs, risk capital investments and such. One can do so with complete, large-sized corporations with centralized operations that have working, trusted business models, or a concrete, already introduced product.”
According to a press release sent to the Budapest Business Journal, this utilization of ICOs may open a new frontier for innovations in the field of the blockchain industry and crypto currencies.
Companies can utilize investment by their clients, workers, owners, or even by dealing in coins with other companies publicly. This approach may be beneficial for those who want to break out of fixed, rigid market positions without giving away leadership positions to outsiders, or going public.
The method may be beneficial for investors as well, Deloitte says, as one can expect lower risks dealing with transparent, prospering companies with a well-documented past instead of projects that do not even exist yet.