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ICOs are “the future of the capital markets”, fund manager says

on Sep 21, 2017
Updated: Mar 11, 2020
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Thе US IPO market seems to no longer be a viable funding option for startups, according to Jeff Stewart, the co-founder of the Global Public Offering Fund.

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Stewart today appeared on CNBC’s programme “The Rundown.”, where he opined that initial coin offerings are “the future of capital markets”.  

“Quite frankly, there is no profit to be made for the banks for having companies go public under a three- or four-billion dollar valuation,” Stewart said, as quoted by CNBC.

“At the end of the day, companies in the $100 million to $200 million market cap range can’t go public. Oracle, Cisco and Intel would be deemed too small to go public today if they decided to list,” he added.

According to his fund, only 18 US companies completed IPOs that raised less than $50 million last year, compared with 557 firms in 1996.

Stewart and Key Compton are setting up the fund to invest in US companies and take them public on Asia-Pacific exchanges. They are planning to raise capital to invest through initial coin offering – a practice which allows an individual or a company to issue digital tokens and sell them to investors for other cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH). Many blockchain startups have been utilising this funding method and as a result, this year alone ICOs have raised well over $1 billion in investment capital.

“Long term, ICOs are the future of the capital markets,” Stewart said. “The tokenization of capital is really the future. It’s going to provide new levels of liquidity and new levels of transparency. You already have most of the major exchanges with major blockchain initiatives.”

The increasing popularity ICOs has attracted regulatory scrutiny to the nascent market. In late July the US outlawed the practice in China, which sparked a massive selloff in the cryptocurrency market.

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