With the help of Simple Agreement for Future Token (SAFTs), Venture Capitalists (VCs) are paving new ways for entering the ICO market that is estimated to yield around $4 billion revenue this year. It is a simple mechanism where VCs bet their existing coins to get a better return. With SAFTs they invest in a start-up for ICO coins, which when prospers involves more customer usage and thereby the VCs gain their share of profit.
It is seen that except for two start-up companies who made a profit of $100 million (Fall 2016 to Fall 2017), rest of the VCs have earlier missed out the opportunity to enter the ICO market. However, the VCs can’t be blamed totally for this. As before the Satoshi Revolution, the blockchain, cryptocurrencies, token, smart contract, etc exited. It has taken shape only with the course of time.
However, time is changing with the distribution of ledger tech which is creating a revolution in the finance tokenization. This will further allow customers to become quasi-investors and companies can also create its economy of scale. SAFT is a midway between traditional initial public offering (IPO) and bitcoin improvised ICO. To make a company public, it is IPO that the industry still resorts to. Then the company sells the shares, stock it and ICO startup gets its token. So it becomes easier for the public to sell and buy coins but without any intermediate.
Besides, SAFT is incentivized in nature and focuses on the technology to propel coins rather than personalities involved. Sequoia is currently the leader in SAFT space and is utilizing them for funding Filecoin and Orchid Labs. It is assumed that with Overstock’s ICO rollout, SAFT has gained such popularity. However, Tzero’s SAFT will be kept under strict vigilance by both Venture Capitalists and ICO communities.