Initial coin offerings have become very popular over these past few months. Dozens of new projects attempt to raise money every single month. We asked a few ICO teams why they decided to take this particular approach rather than seek VC investment. Their answers are pretty interesting to take note of.

10. CrowdWiz Co-Founder Slavena Savcheva

“Up until now, it wasn’t possible for people like you and me to participate in the traditional funding round; this unique option was mainly available to VCs and other investment parties. Also, the VCs are entitled to shares in the company, whereas crowdfunding allows the control to remain in the hands of the founders. In the case of CrowdWiz, due to VC structure, companies are relying on a sole decision maker and are completely missing the crowd knowledge factor. It has been scientifically proven that this is the most accurate method in lots of areas. Lastly, with crowdfunding, there is proof of the demand for the product/technology.”

9. Winding Tree CEO and Founder Maksim Izmaylov

“Decentralized projects by definition must have their ownership as widely distributed as possible so there is no centralized control. That is why crowdfunding is the only way to fund decentralized protocols.”

8. Blackmoon CEO Oleg Seydak

“One of our main value propositions is to bring together the ‘best of both worlds’ for both crypto and traditional asset managers. Set a benchmark in the industry. Thus, we see that crowdfunding via an ICO (or token sale) would attract more crypto investors who have a clearer understanding of the advantages blockchain technology can bring to the industry. Traditional funding is a complicated form of achieving results, not to mention that it would limit the number of crypto investors who would be able to participate.”

7. Jelurida Co-Founder Lior Yaffe

“In our case, Jelurida did not have any significant stake in the NXT pure proof of stake token. Our new innovative parent/child chain architecture named Ardor required a new parent token which we distributed free of charge to existing NXT holders during 2016 and a child child token called Ignis of which 50% will be distributed to existing NXT holders by the end of December. We sold the other half of the Ignis token in our crowdfunding campaign in order to finance the development of this groundbreaking technology.”

6. CarFix Co-Founder Vladimir Lupenko

“ICOs currently present a unique opportunity to raise non-dilutive capital to build technological infrastructure such as blockchain platforms to create significant value for various stakeholders of the core business: customers, partners, shareholders.  Token purchasers, when making decisions about token acquisition, need to assess the fundamental value drivers that underpin the token appreciation potential.  Value created for stakeholders is typically an indication of token price growth potential.”

5. Narrative Founder Ted O’Neill

“If we had gone with traditional VC funding, the company may have had strong capitalization, but the users would not have participated in or had the same level of impact on that value.  By utilizing a Token Sale, we allow our future users to drive the value and participate in the success of the network.  Since our network is all about user autonomy and rewarding active participants, a Token Sale perfectly aligns with the objectives of the project.”

4. Colu CEO and Co-Founder Amos Meiri

“It’s true, we could have raised VC funding, but we decided to issue a token for two reasons: When building a location or community-based business that is essentially a marketplace you have a chicken and egg problem. What should you tackle first – supply or demand? If you built a community in one location, how do you scale that? How do you scale to 20 communities in parallel? We knew we needed to raise a big round, or find a business model that will help us create a network effect. The CLN model provides both.”

3. Vanywhere COO and Founder Itay Shechter

“There’s no denying that issuing a token is a great way for companies to raise funds to achieve their goals. But that alone isn’t our reason for doing it. Having our own token allows us to use smart contracts that benefit our users in a variety of ways, from our rewards program, to our reputation system, dispute process and more. We’re building an ecosystem, economy and brand, and having our own token allows us more control over our brand and its value and values than if we were tied to an existing currency. Issuing our own token also gives other people who believe in our vision and platform the opportunity to take part in it and help build the next big thing.”

2. Zen CEO and Co-Founder Adam Perlow

“The coins act to subsidize miners and serve as a focal point in the system. Allowing people to buy the coins and fund development subsidizes development and aligns the interests of everyone in the system. We can’t use an existing token due to the lack of the deterministic nature required for inflating the supply curve.”

1. Bancor Co-founder Guy Benartzi

“An ICO was the best path given our Foundation’s mission. It is especially useful when you seek to build a non-profit ecosystem that can support many for-profit players, such as the Internet or Ethereum. As Bancor is seeking to create a new standard for cryptocurrency protocols, this mechanism was best able to provide us with both the capital to build out the technology and bring in as many participants as possible to be a part of seeding the ecosystem.”

It is good to see some different opinions on why ICOs make more sense than VC funding. This new business model opens up a lot of opportunities, yet it also creates certain risks. Whether or not these businesses made the right decision in choosing to go with an ICO business model remains to be seen. Governments all over the world are still scrutinizing this industry whenever possible. An interesting future lies ahead, though; that much is evident.