ICO and IPO are two medium to raise Funds from general public or crowd. Both of these medium of crowd funding platforms are of high importance and ventures are considering both of them. Crowdfunding in ICO is done through creation and sale of a digital coin or token to fund project development. On the contrary, IPO is the initial public offering. It refers to the public sale of the shares of the company for the first time.
Let’s have a look at the differences between a ICO and a stock IPO for your clarity.
Due to the mandatory requirement to register with the regulatory authority, a legal document known as prospectus is created through which the issue of the IPO is done by the company. It will be representing the statutory declaration of the intention to issue the shares by the side of the public. On the contrary, the ICO is not bound to any legal requirements to release any form of documentation.
Tracking the Record & Credibility:
There are so many requirements that a company should be covering for listing the shares through the IPO. This process requires professional accounting firms to verify accounts, or the investment banks to act as the underwriter for the side of the deal. But in ICO, there are no requirements over the adherence to any regulatory framework and any legal protocol. This is the main reason that promoters or ventures find it much easy to launch an ICO.
Due to necessary registration and compliance doing an IPO is not easy and involves a high cost requirement for the same which might just cause a startup to doom at early stages, This is not the case with ICO due to which it has a better edge on IPO.
Overall for a venture or project, raising fund through ICO is much easy while doing the same via IPO is not everyone’s Cup of Tea. That’s why due to these ventures are preferring ICO over IPO.