- Valuation over 10 times multiple the revenue
- No profit whatsoever
- Expenses are covered by begging money
- The only hope of ever getting paid is selling the whole rubbish to someone else.
That’s is a typical Start-up.
But I do understand what has been the reasoning of Start-ups founders when they decided this absolutely ridiculous execution plan and valuation.
The founders of Start-ups don’t see their creation as a company, but as a whole industry. Sadly though, that interpretation is completely wrong, as company by definition is “a legal entity which sole purpose is to generate profit for it’s shareholder”.
There we see a conflict:
Legally Start-ups are companies, but in reality there are not even close. But the Start-ups are not unions, communities nor charity organizations either.
So what are they?
Well until last recently, there was no correct legal definition to describe the Start-ups, until now. Start-ups are ICOs.
ICO is the perfect innovation to give approval to the ridiculous goals and plans of a Start-ups.
Before ICOs, it was very hard to convince smart investors how the company with:
- No revenue
- No profit
- No patents etc.
Can be worth millions.
And usually they were not worth that even close. Still sadly lot of inexperienced though rich investors buried their money in Start-ups.
But ICOs are different. When you raise money for the ICO you are not raising the money for the company only but for the whole industry the company is creating.
When you invest in company you get certain % of it, that’s all. For you to make any money you need the company to make profit and pay dividends or to be sold.
And most of Start-ups never did any profit. Lot of them managed to make an exit-trick, which later became the only hope of ever seeing any money for every Start-up founder.
On the contrary when you invest in ICO you don’t need the company to make profit. You just need them to continue doing what they did. Even while the ICO is in stage of product development their token can raise in value. And to ensure long term ROI all the company has to do is launch their long awaited product and make revenue. And to be honest that’s the only thing Start-ups are good at. They loose money, but there is revenue. Luckily with ICO, loosing money from business is not a problem as they can always fund themselves by selling more of their tokens, which will only continue to raise in value.
Every intelligent person understand that when company makes only revenue and no profit, you need to invest in something that is connected to their revenue, not profit. And ICO tokens are exactly that.
With ICOs it finally makes sense why any company with only technology and idea would even think of raising millions of dollars.
ICOs have saved the Start-ups and finally succeeded at what Start-ups have been trying for ages and failing miserably even on the theoretical level.