The DAICO is a combination of a DAO (Distributed Autonomous Organization) and an ICO (Initial Coin Offering). In this variation on an ICO, a development team setups a DAICO contract and lets investors contribute funds to the contract in exchange for tokens. Once the contribution phase stops, the token balances are fixed and at that point the tokens are tradable. The contributors of tokens decide how much of the funds are applied to the project. It’s called the “tap” which determines how much of the funds the development team can draw out. The contributors maintain the right to raise the tap, lower the tap, or shut down the system altogether and get their funds back. The intention is to fund a team with an initial amount of tokens and then raise it over time as the team proves itself. It reminds me of the traditional practice among venture capitalists to provide their funding in stages.  Oftentimes a company will announce a fundraise of $5M. In practice, the VC didn’t write a check for $5M, but rather gave the team an initial amount such as $100,000, to begin work. If the funds were spent well and progress achieved, then more funds from the $5M would be allocated. If the funds were not spent well and little progress was achieved, then no further funds would be forthcoming. In the DAICO each investor votes independently, so it is up to the developers to convince some portion of the investors to increase the tap. Other issues to figure out include how to handle the voting process- how often, what duration, what interval?   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

Valuing cryptocurrencies is quite difficult. There are numerous articles demonstrating how token valuations are coming up short. Tokens don’t follow traditional valuation metrics such as discounted cash flows or net asset value. The startup world faced the same problem in pricing seed stage startups. For those companies we looked at the team, the status of the product, the presence of IP, customers and revenue traction (if any), and valued it based on how much of each was already built into the startup. It was a “funny money” valuation because as the startup grew and eventually shifted from the startup valuation metric to a traditional discounted cash flow metric, the valuation would usually drop by 30%. The drop was due to the fact that we were moving from a value of the business prospects to a stricter value of the cash flow. In tokenomics, we are trying to price the token in an ICO according to the value it will provide. Here again, discounted cash flows and hard asset valuation techniques do not apply. We have to again look at the values built into the business or in the case of an ICO – the digital eco-system you are building.  If there is a strong team behind it with a great track record, that token will be valued higher. Team, product, users and intellectual property are the core four to consider. For ICOs, I propose a fifth component- the value of an ecosystem that digitally integrates all the components. A digital ecosystem built around a core platform or set of standards will provide more value than a disparate group of companies who have a loose association and few if any data linkages. Digitally integrated ecosystems merit a higher valuation than non-digital ecosystems.  Gartner defines these new systems as one of strong interoperability. Companies which share information through integrated data networks will be able to move faster and provide better service than two separate companies that have to manually share information through APIs. ICOs through their tokens will have not only the valuation of a company but also of an integrated digital ecosystem.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

The GOOSE Society has been funding startups since 2005 when it was formed by Jack Gill, a legendary Silicon Valley venture capitalist, and Rod Canion, the founder and CEO of Compaq computers.   GOOSE stands for the Grand Order of Successful Entrepreneurs and every member has either started or ran a highly successful business.  The Rice Business Plan Competition (RBPC) is the largest and richest student business plan competition in the world.  The GOOSE Society has been awarding prizes to the winner of the RBPC program since its inception. The grand prize is now an investment prize of $300,000 from the GOOSE Society with potential for much more.The group is comprised of twenty members including five MBAs, one MD, four PhDs, and one JD. GOOSE has invested over $30 million in startups with four exits of 5-10x and has 16 current investments.  The net worth of GOOSE membership in aggregate is in the billions and the members thrive on rolling up their sleeves to help their portfolio companies. They have now opened an office at the Rice Alliance office on Rice campus to continue funding startups from the Rice Business Plan competition, the Texas Medical Center, Station Houston, and other sources.  Although based in Houston, TX GOOSE sources and invests in deals from all over the country. [SL2] They currently are invested in deals across industries from life sciences, energy, IT, and green tech.   Entrepreneurs who want to pitch the GOOSE society can send their executive summary and pitch deck to samantha@goosesocietyoftexas.com. Their website is https://goosesocietyoftexas.com/ If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

For some people tokens appear to be a brand new concept that they’ve never seen before. But in reality, we all have seen use cases for tokens. Frequent flyer miles is an example of tokenizing a network. Airlines came up with the frequent flyer program many years ago by giving “miles” to those who flew on their planes.  They offered miles or tokens to reward those who joined their network and used it. One can think of an airline as a network of services such as booking agents, baggage handlers, pilots, and more. For those who flew more often the airlines gave frequent flyer “tokens”. They did not give cash for flying. Why? Because the airline wants you to continue using their network for flying and not a competitors’ network. At some level, it locks you into their network. The frequent flyer program is just one example. There are many others such as cash back on credit card usage, loyalty points for department stores, that free tenth cup of coffee at the coffee shop and there are many more. The only difference with ICO tokens is that there are many more examples of how you can use tokens and keep track of them. Instead of using a punchcard every time you order a coffee, the usage is stored on the blockchain.    Just as frequent flyer miles are not a currency but rather a pseudo currency so tokens are the same—they represent value but not necessarily legal tender. Just like the tokens used in an ICO they are designed to encourage you to use a specific network.     Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

As the ICO industry starts to mature, we’re now seeing the end of the beginning. The regulators are rushing in shutting down the scams and raising the bar for entry. Today just the legal work for an ICO costs $100K+ for the Whitepaper and reviews of the website. ICOs are shifting into the domain of very well-funded startups and later stage firms. I receive calls from companies with substantial revenue and traction asking about ICOs as they want to skip the Venture Capital funding round because they can control the terms better. In addition to funding, some companies are considering the advantages that come with token-based networks.  It’s not only a new way to raise funding but it is also a new way to compensate employees and offers a  new revenue growth strategy. Some companies see potential benefits in paying employees in tokens rather than dollars as the tokens can appreciate through the growth of the network they are building. A dollar is only a dollar but a token can appreciate in value if the network it represents grows. YourNow recently raised $24M in an ICO sale. They shifted their revenue strategy from taking a transaction fee and then having to grow the user base to issuing tokens and then making the tokens more valuable by making the network more valuable – all  without having to substantially grow the user base. Other companies are looking at moving their technical platform to the blockchain as an alternative growth strategy. The blockchain offers clear benefits for those who adopt it. While very large companies may find it difficult to re-engineer their sites into a distributed network most growth companies can reposition their network to accommodate it. ICOs and blockchain technology bring more than just funding –they can provide a  growth strategy and a compensation tool as well.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

In the startup world, an entrepreneur could be building a platform, a point application or an add-on tool to other systems. So in the blockchain world, one could be building an entire digital ecosystem, a standalone application, or an add-on to another system. I see ICO candidates daily who want to mint their own coin and run their own ICO campaign.  In looking at their application I find some are building a digital ecosystem but many are building add-on tools or point applications. For those building a digital ecosystem it makes sense to run an ICO and launch a new token. For the others it makes more sense to work with an existing digital ecosystem or application platform and join their network. The Dot Com era imploded for many reasons but one was the fact that major infrastructure components were not yet built.  Those who raised funding in the 1990s often had to raise $5M or more to build a website because they were building their own server farms, coding user interfaces in HTML, and had to pay exorbitant rates for labor because the programmers were few and far between. One of the key issues to consider in your business proposal is the amount of infrastructure available and what resources your application needs. In the early days of the internet many applications were not easily built because the infrastructure was not yet available. If you want to build your own digital ecosystem and launch your own token then realize the challenge ahead of you with regards to the amount of infrastructure and support systems needed to make your system usable. I look at some ICOs that raised $50M and think they will need $500M to accomplish it because of the many layers of infrastructure that need to be built. In looking at your ICO ask yourself, do I need my own token? Can I use other digital ecosystems and their token?  Is the blockchain infrastructure available for my application?  How much will it cost to build the missing pieces? The Dot Com era came to a screeching close twenty years ago but the lessons still remain.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

Every day I receive questions from prospective entrepreneurs from both startup and  growth companies asking if they should run an ICO. I respond with two questions:     Does a blockchain-based system improve the product/service you offer?     How would a token improve the use and access of your product/service? With the first question we explore how blockchain provides greater security, audit trails, and for some applications a lower cost of operation as it encapsulates many of the supporting functions. We then discuss how this impacts the company’s product/service and if it would benefit from a blockchain implementation. The second question, delves into tokenomics. It’s the role of the token in the application. In the rush to raise ICO money many force the token on their system without regard to how it will be used. One can build the best system in the world but if users don’t want to use tokens to interact with it, it will go nowhere. It would be more prudent to find a token use case and then build a system around it. The discussion around token usage is sometimes referred to as Tokenomics and answers the following: How many tokens are generated and available? What is the value of a token? What does it cost to obtain a token? What do you do with leftover tokens from the raise? How many tokens does it cost to use your system? And the list goes on… Putting a token into the mix has the advantage of acting as a pseudo-currency through which you can incentivize other companies to build on top of your platform enhancing the performance and making it more robust. You can more easily charge users of your platform such as those who want the data coming out of it and not the product/service itself. Even more, you could add AI algorithms to the system and charge tokens for the answers it produces. I can even see tokenized systems of the future charging tokens for making a positive impact. For example, if the company’s platform generates more business through lead generation, the company receives a commission from the increased revenue of the company and not just the increased lead count. Tokens also can incentivize others to provide ancillary services through your platform. If you need additional functionality you don’t have to build it all yourself, you can attract partner companies to build around your system and earn tokens for the use of their add-on application. In short, building a digital ecosystem requires mechanisms to attract, incentivize, and compensate those who provide value. Tokens provide a seamless, non-invasive payment mechanism to achieve this. An ICO promotes the use of blockchain based applications with strong tokenomics behind it.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

The ICO continues to generate huge sums of funding now surpassing venture capital. In raising funding from the entire world, there will be costs to achieve the funds raised. ICOs are now splitting into two categories – those raising less than $25M and those raising more than $200M. Here’s a cost estimate with a range depending on the level of marketing, legal, and cybersecurity you pursue for your ICO raise. Whitepaper (core content must come from the company)- $10K to $20K. It takes approximately 200 hours to complete a whitepaper including reviews. Just about all content for your ICO comes from the whitepaper and is the core document investors, partners, and team will use so it’s the primary focus. Website $5k to $20K. You can generate a nice looking site for minimal dollars. If you translate into additional languages and want to ‘harden’ the site to withstand cyber attacks you will need to spend more. Also, you’ll need to own all versions of your  website name in all top-level domains, in all countries, including all ‘misspellings’ to ensure that someone doesn’t spoof your site. Token ERC 20  $10K to $20K  (to place on exchanges) –a  token economics paper is critical, just like a whitepaper it as important to spend time on this. Advisors  1% to 2% of equity. You will need a number of experienced advisors in the crypto space to drive credibility and they have to be engaged with the project. Smart Contract audit $10K to $50K. The Smart Contract will need to be designed, coded, and audited.  The complexity of the code and other factors determine the cost. Marketing $20K to $100K-$5K per month for the initial marketing and then $20K per month for 2-4 months leading up to pre-sale and through the crowd-sale. Most services have a minimum of 4 months commitment. Community Management $10K to $50K- This is for managing the Slack, Telegram, and other channels.  A customer service function is installed and run for the duration of the campaign with the majority of the activity during the pre sale and sale. Paid advertising- $5K/month  this is optional but can be helpful. For a six month campaign this totals $30K. Legal Fees $20K to $100K. The big name law firm will not take a client for less than $100k in billings for ICO work. Project management  $5K to $10K/month for 6 months – $30K to $60K.  Some take a percentage of the raise in tokens or equity. Total $125K to $430K depending on the level of service and how much you do yourself. This doesn’t include salaries, travel to meet investors at conferences, office space, etc. In addition, you’ll need banking services that accept cryptocurrency– $10K. International marketing adds another $25K to $100K onto it depending on travel and reach. Cyber security steps will add additional cost as well.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

As ICOs continue to increase in number and funds raised on an exponential scale, it’s interesting to step back and look at the ICOs from a business perspective. While the technology is fast coming up the curve improving on scalability (still a long ways to go), it’s the business models that appear to be trailing behind. There are many business model and use cases that need to be invented. Here is a list in no particular order: The Rarepepe and Cryptokitties show a new business model in which all assets can be digitized then traded, sold, or bought.  This could be applied to physical assets in addition to digital ones as I believe one day everything physical will have a digital representation for legal, financial, and other management. There’s a need for a “google” of the blockchain in which anything can be searched or queried on a blockchain. Most government functions (DMV, tax collections, utility services etc) could be done better and more cheaply with the blockchain. In fact, I predict that most government functions will end up on the blockchain sooner rather than later as a cost reduction move. A peer to peer network platform that can make blockchains with smart contracts seamless and easy to use. We need mechanisms to enforce what the smart contracts instruct. Instead of installing the blockchain and building a company around it, how about an existing company adopting blockchain as an enabling technology to increase security, improve functionality, or provide audit trails for search and transparency? Since there are so many business model and use cases that need to be invented, let’s not create yet another wallet, exchange, or trading platform.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.