I have pulled the trigger on the Forever Has Fallen ICO, killing the public sale. We will be going completely private, working with sophisticated/accredited investors. My only regret is not being smart enough to do so earlier. I recommend that people who are serious about their business make the same call, but obviously my actions are reflective of the situation and context of our business. So let me start at the beginning and you can decide what is right for you…
Why the current ICO model is wrong — for us and maybe for you, too
- Public token sales are about one thing only — liquidity now!
This is, in spite of the fact that, overall they do more harm than good. Tokens get placed on exchanges, they get hammered — most people lose a lot. Our model calls for at least a 12 month period where we develop a market of real token buyers (people who will use the damn things!) in our case gamers.
In the real world, a 12 month wait for a potential +10x return is seen as pretty freaking awesome. We sell the game tokens cheaply now and, at launch, raise the retail pricing dramatically, i.e. 10 cents to 50 cents — so they are still very affordable for gamers, but we also recognise the risks for early buyers. But in crypto-land, 12 months is 11 months too long.
Despite our Forever Coin token being a true game token (it’s used in the game, for privileges, discounts, access and status; you can either earn or buy and then use with an online/offline economy), we found that good quality investors were very shy about the public sale, because there is a big SEC ‘what if?’ attached to every public sale.
2. ICOs are no longer for funding like Kickstarter
We have a complete business model, plan and strategy to create a new type of global game/entertainment — we don’t have a finished product. Initially the whole point of an ICO was to fund Kickstarter style, but with larger companies moving in to tokenise their business, buyers go where they see less risk.
Therefore, going private for us means creating a series of rounds to fund milestones, generate a MVP and most likely bypass the ICO process altogether and start selling tokens to gamers.
3. There exists fully transparent corruption
This is mostly in the form of famous advisors, rating sites, airdrops/bounties and pumper & dumper networks. I have been approached numerous times to hand over a large chunk of tokens and exploit the hell out of them to turn a quick buck. Doing so would have destroyed the business, because our model calls for smart tokenomics — selling just 35% of the total supply, and using 45% as a reserve to support the token on an exchange, provide rewards for gamers, maintain stable pricing and, if need be, become the market maker.
Again, being public put us at odds with a well known and documented system of using large ICO profiles to sucker people in, shift a lot of tokens asap onto the exchange, pump up the value and sell like hell. Going private means serious, non-hysterical conversations with people who want to generate long term and, ultimately, more certain value. I feel far more at home in that type of setting.
4. The ICO model is dead, it just does not know it yet
We are now seeing car crash after car crash, with ICOs failing to launch. People have wised up and, thanks to a stream of garbage, what could be a fantastic model has been torn apart. Now you’ll see the rise of ETOs (Equity Token Offerings) and other models that form a stronger alignment to real-world investor requirements.
I feel for the authentic ICOs who will get lost in the mix, either because they don’t have a complete product, lack the funds for marketing or the buyers of ICOs continue to dwindle as the supply of junk continues to rise.
My recommendation for anyone who has a genuine business opportunity is: go private and leave the bounty programs/airdrops/mass hype and general silliness behind. If you have a great model and value proposition, there are investors out there who can help build a real business.
In doing so, save yourself being asked 10,000 times by people around the world, “when are you listing on an exchange?”