New opportunities for business activity are emerging along with the development of information technology. For example, you can receive financing for your project almost directly from your couch. How should you attract investments to your business — using a traditional way, through an investment company, or by turning to a Bitup-Agency?
Investment Company
Banks and loan companies are still the main sources of financing. Getting a loan for business project implementation (even with a high interest) is almost impossible if you do not have an active business, property to serve as collateral or income that would allow paying out the loan.
You can count on a large investor only if your business offer is intended for the B2B sector and supported by good recommendations from business partners.
Where to Look for Investors?
Most startups cannot offer capital owners anything but an idea. In such cases, entrepreneurs have to look for “business angels” — private investors united into associations or clubs, which handpick promising projects and finance them as an organization or individually. Another way to attract initial capital is directly through private investors.
In order to add your startup to the investor’s portfolio, you have to present a business plan and a beta version or a prototype of the offered product with its following launch. Sometimes, creating a “selling” business plan on your own is difficult and a startupper has to turn to specialists to prepare project documentation, which leads to additional costs.
You can find an investor (and more than one) by publishing your business idea on specialized websites of crowdfunding platforms, where, based on the type of sponsor remuneration, a startupper chooses the crowdfunding model that fits his/her business idea from:
— Charity;
— Non-financial reward;
— Financial reward:
- Crowdinvesting;
- Crowdlending and P2P lending.
The first European platform for “public financing”, Ulule, was created by the French in 2010 and now estimates five thousand successful projects.
With the development of IT and the emergence of Blockchain, another way of attracting financing became possible in the form of crowdsale or ICO (Initial Coin Offering).
Crowdfunding (public financing) implies that projects are funded exclusively with fiat money. The capital owner purchases the end product of the project even before its implementation. During ICOs (crowdsales), fundraising means the acquisition of digital tokens by an investor in order to use the services of the project after its launch. The acquired crypto coins can be traded on special digital exchanges to receive profit from the exchange rate difference of coins. Or, according to the terms and conditions of the project, an investor becomes a shareholder and the number of tokens defines his/her stake.
Currently, the ICO platforms that are in the highest demand include: Ethereum, Omni, Waves, Bitbon System, Nxt and so on. Each of the mentioned platforms strives to find its place in the global Blockchain-based economy. According to ICObench, as of the third quarter of 2018, 518 successfully implemented ICO projects have attracted $2.4 billion. Private financing has increased by about 90%, which indicates the interest of hedge funds in ICOs. According to the studies of Crypto Fund Research, by the end of 2018 – the beginning of 2019, approximately 220 new funds intended for investing in crypto currencies will emerge. Experts believe that venture funds will also be among the ones interested in acquiring crypto assets.
Bitup-Agency
Despite a certain fall in crypto currency prices, ICO is still the most accessible resource to attract initial capital for startup or business idea implementation.
Among the platforms we had already mentioned, the one that deserves special attention, in our opinion, is a progressive digital investment platform — the Bitbon System. Contributing is its main difference from similar platforms in the way it approaches digital investments. Bitbon, as a System’s internal currency, contains a part of property rights to material values. The developers define fundraising in the Bitbon System as IBO (Initial Business Offering), and it includes three parties: Contractat (initiator of the business idea), Contributor (investor) and a Bitup-Agency, which makes the decision on the admission of the project to the IBO and supervises the project at all stages until its commercial launch.
The Bitup-Agency as a System participant evaluates the project and assigns it a corresponding category, depending on whether or not the offered business idea is backed by assets, which also determines the price of Projectbons (tokens of a specific project) in the IBO process. All rights and obligations of participants involved in Contributing are regulated by a digital document — Projectbon Public Contract of a specific project.
When turning to the Bitup-Agency, the initiator of the business idea (Contractat) receives a certain space in the Bitbon System, which contains all the information about the project, and his/her rights are protected by the Projectbon Public Contract. Most business idea creators are cautious about sharing any information on the project because of their distrust of the resources. If you present your business idea via the Bitbon System, you do not need to worry about someone else using it. The Bitup-Agency ensures that the rights of the Contractat (creator of the business idea) are not being violated, and that the obligations to the Contributor (investor) are fulfilled in accordance with the signed Public Contract.
Technologies will continue to develop while crypto currency and Blockchain will become more attractive as investment instruments to both investors and entrepreneurs. In order to keep up with global trends, you should already start embracing digital platforms as an instrument for the development of your business.