Benefits of Initial Exchange Offering

by Riya Steve Marketing

Fundraising Environment

The fundraising of IEOs is conducted in the exchanges whereas, in ICOs, it’s conducted in token issuers platform. Once the tokens are created, the startup can approach the exchanges to list their tokens to raise funds. The exchanges will charge a listing fee and commission on token sales.

Leveraging User Base

The main benefit of employing IEOs is the wide user base of the exchanges trading tokens. Every popular exchange has millions of users, those who are involved in active trading of cryptocurrencies. If a company wants to get funded quickly but has no popularity among the investors, then IEO is the best means of raising funds.

KYC/AML

Problems with verifying investors? No worries! In IEOs, AML/KYC will be done by the exchanges. So there is no need of wasting time in employing legal companies to oversee the verification process. Generally, KYC/AML will be done by the token issuers which makes the crowdfunding process tedious.

Reliability of Token Issuers

The exchanges thoroughly check the credibility of token issuers before launching them on their platform. This creates a win-win situation for both the entrepreneur and investors. Investors have trust in the project party as it is verified by the exchange and the entrepreneur can utilize this mileage for their fundraising process.

Smart Contracts

Smart Contracts in IEOs will be managed by the exchanges itself, unlike the token issuers who manage smart contracts in ICO. The exchanges will manage the token sale event, track the available tokens in circulation, demand-supply, daily trends, etc. This reduces the burden of the project party to concentrate better on other activities.

Token Listing

Generally, token issuers will raise funds through their platform and list in the exchanges. The token issuer needs to comply with more regulations before approaching the exchanges and this leads to opportunity cost. In IEO, the process starts with the listing of tokens in the exchange and raising funds.

Summing-up

Raising funds for a startup at its initial stage is a challenging aspect as it decides the company’s existence. Initial Exchange Offering is a gift for every budding startup aspirant to build their dream through effortless fundraising.