Fundraising is the process of acquiring capital from individuals, organizations or governments for a specific purpose. In the cryptocurrency world, fundraising typically involves raising funds to support development and marketing activities related to a new blockchain project or token offering.
The most common type of fundraising in crypto projects is an Initial Coin Offering (ICO). An ICO provides investors with tokens that can be used on the platform being created. Through this process, companies are able to raise large amounts of money quickly without having to go through traditional venture capital channels. In addition to providing capital for development, ICOs also help spread awareness about a particular project and create initial liquidity in its markets.
In recent years, additional methods of fund raising have become popular among cryptocurrency startups including Security Token Offerings (STOs), Initial Exchange Offerings (IEOs), and Airdrops/Bounties programs which distribute tokens directly to users in exchange for promoting their product or service online.
As with all investments, it’s important for potential investors to do their own due diligence before investing in any type of fund raising opportunity related to cryptocurrency projects. Investors should thoroughly research any team members involved as well as understand the details around how these projects will use investor funds prior making an investment decision; this includes understanding what types of legal protections may exist if something goes wrong with the company’s plans after they receive your investment dollars.
