ICO M u0026 A? Token withdrawal mechanism can be quite complex


nnnThe new model for early technology companies is growing rapidly, and many entrepreneurs are flocking, and according to Goldman Sachs, ICO and tokens have gone beyond traditional venture capital for all companies. To a lot of money. This raises a problem that makes it easy to treat the encrypted currency and the tokens market as a bubble, but if used properly, there is still a great deal of value. So what kind of mergers and acquisitions strategy to take such a company? In this review article, venture capitalist Ash Egan outlined how the cryptographic tokens that issue public transactions could affect the ability of future start-ups to be acquired or acquired in the future.n
nnTranslation: Clovern
nAsh Egan, a venture capitalist at Converge, an early investment firm, is responsible for the company’s investment in chain-chain start-ups Chainalysis and Enigma.n
nIn this review article, Egan outlines how cryptographic tokens that issue publicly trades may affect the ability of future start-ups to be acquired or acquired in the future.n
nNowadays, entrepreneurs flocked to the green grassland brought to the tokens for sale (a new way to bring early technology companies). In fact, according to Goldman Sachs, ICO and tokens on sale have gone beyond traditional venture capital, not just for the chain of chain companies, but all companies.n
nConsidering this attraction, it is easy to see the encrypted currency and the tokens market as a bubble: Peter Schiff and Howard Marks have expressed their concern about this area.n
nHowever, the issue of tokens there is a huge value, tokens this model is so rapid development is also a reason.n
nThese reasons include:n
nnEntrepreneurs do not have to spend millions of dollars in funding for a few months. Fred Wilson, a famous venture capitalist, even believes that a paradigm shift will occur.n
nnnThe introduction of tokens usually encourages tokens (potential users) to contribute to the network, as they now have vested interests in the success of the network. In this sense, the token is the solution of the problem.n
nnnThe sale of the token makes the company once again become very attractive … Initiating ICO has also become a reliable way to get media attention in 2017. (On the other hand, they also brought the wrong type of investors.)n
nnnCompanies are now able to raise their seed rounds, A, B, and C rounds through angelic investment, and are able to focus on building networks and recruiting without the need for energy to finance.n
nnAs a venture capitalist at Converge’s focus on encrypted currency and block chain, I am very curious about how the token will affect the decision of the acquirer. The chain of chain companies, even those who do not have their own tokens acquisition does not yet exist norms, but we have seen some small acquisitions – Suk, Mediachain, CryptoWatch, Bitnet and CleverCoin.n
nIt is important to know how many tokens are managed through an independent entity when updating the corporate M u0026 A framework and jumping into the company’s acquisition of the company X with the block chain tokens: for example, Headquarter located overseas (as shown below).n
nIn addition, tokens bring unique performance: some through the Howey Test (and Howey Test) – and is regarded as securities, many are issued through the Foundation (rather than the company), some have even if the utility, and The other may be in the tokens after several months to several years after the sale of tokens will be distributed.n
nSome companies are deliberately treating encrypted currency loss phobia (FoMO) and are discussing how they can buy the zoning block chain company.n
nCompanies may want to buy a company for a large open source developer community, or simply because the company found it too cumbersome to build their own tokens.n
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nHowever, although there is interest in this, but the enterprise mergers and acquisitions team but no status to follow.n
nHere are five possible views:n
nnThe company is valuable, but the token does not mattern
nnnThe company is valuable, and the token seems to be interestingn
nnnThe company has no value, but the token is important for us to move forwardn
nnnWe do not know where the value is, but we all want to have itn
nnnRegulatory approaching, compliance nightmare in sight – we still wait for this stage to end itn
nnScenario 1: The company is valuable, but the token does not mattern
nn”We just want the company, do not care about the token.”n
nnThe company has a patent and the team is excellent, but the M u0026 A team does not understand the need for tokens to do business or why its tokens are so high.n
nFor the diligence, the M u0026 A team will try to buy the company, but ignore its tokens. But for the sake of just in case, the team will review the tokens sale document, understand the company’s tokens structure (for example, C-corp type company or fund?), How the team gets compensation and Currency distribution plan. If it is indeed necessary to acquire tokens, the number of tokens issued will also have a significant impact on the likelihood of withdrawal.n
nIf the token market value is high, and many tokens have been issued, then the transaction has been very reluctant, let alone complete the transaction.n
nScenario 2: The company is valuable, and the token seems to be interestingn
nThe team is very good, the technology is great, the agreement also makes sense, and the team has developed a valuable user network.n
nIn this case, it is likely that there will be some relationship between the company and the company that you want to acquire. Because most of the activities carried out in the chain area are experimental, or the market value of the product is not very high, I do not think any company will pay the full price, plus the coin does not settle the total price.n
nThe issuance structure of the token will greatly affect the purchase price.n
nScenario 3: The company has no value, but the token hasn
nThe company was lucky to be the first to enter the market, but the team did not meet the standard – there may be some signs of fraud or malicious activity.n
nIf the market position, the developer community and technology are first class, companies may actively buy wild tokens, or even unclear tokens.n
nThis should be the M u0026 A team most do not want to show the top management strategy.n
nScenario 4: We do not know where the value is, but we all want to have itn
nThis is a scene of loss of phobia.n
nRegardless of the reason (for example, if a firm is developing a block-chain strategy by the pressure of its shareholders and the board, but managers find that they are not aware of the chain within them), price sensitivity becomes an afterthought, and The M u0026 A team will buy the block chain C-corp at the current tokens bid, as well as its unchecked tokens.n
nAccording to the tokens acquisition strategy, the scenario may cost billions of dollars. And for the enterprise is the biggest problem is the wild token will happen? Are these tokens holders still loyal? Or the influx of competitive block chain systems?n
nExisting companies (such as betting company Betfair) may pay $ 100 million (instead of $ 1 billion) for some of the things that have regulatory advantages. The company is ignorant of the point-to-point betting service, let alone block chain.n
nScenario 5: Regulatory approaching, compliance nightmare is at hand – we still wait for this stage to end itn
nToday’s coins and C-corp mergers and acquisitions of the only corporate strategyn
nMergers and acquisitions, as well as top management, find it difficult to keep up with the current situation and fear that millions of dollars will be lost due to currency fluctuations, or that they do not know how to start the tokens. Because pricing and acquisition procedures are so complex, many companies choose to stay out of the way, let their competitors decide the price, or at the crucial moment to take effective action.n
nIn this case, the firm may (scene 6) study the potential acquisition and eventually release its own block chain tokens, which is somewhat similar to what Kik currently takes action through Kin Interactive.n
nBusinesses (especially listed companies) will unknowingly move to scene 5 in the next few years or decide whether the tokens have great value and issue their own tokens.n
nFor all companies considering tokens, it is more important to understand the downside risks than to understand the benefits of introducing additional capital. Focus on the long term. In the end, how do you clearly explain the value of the token to potential buyers?n
nOther areas of the M u0026 A team will be analyzed (not including the above): Who is responsible for promoting the network? Miners?n
nAs an entrepreneur, an investor with a company, we need to jump out of the inherent thinking in the internet 3.0 era to think about traditional corporate mergers and acquisitions. If you have an idea of ​​how the token will affect your acquisition, please come to the upcoming event of Boston Crypto or contact us (see below).n
nMy manager, Boston, a block chain organization, Boston Crypto, will hold a seminar on tokens on September 5. If you have more ideas to discuss with us, please join our seminar.n
nConcerned about Ash Twitter: @AshAEgan and @CryptoVC. Thanks to Maia Heymann, Ty Danco and Justin Gage for review this article.n

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