Episode 44 : How IEOs Are Changing the Crypto Game.

Mario

Founder | CEO | Investor

CryptoCurrent Podcast with Richard Carthon and Mario Nawfal.

CryptoCurrent is a blockchain and cryptocurrency multimedia news outlet, educating the public through thousands of blog, social media and podcast posts. Richard Carthon is alumni of the business department at Tulane University and has extensive experience with consulting tech startups and other companies with fundraising, marketing, sales, and finance. Richard currently hosts the CryptoCurrent podcast and in his spare time can be found at several speaking engagements and can be probably be found speaking at a conference near you. Make sure to check him out on TED.com

 

Mario Nawfal dropped out of university and started his first business, reaching seven figures within the first year. In 2017 he started IBC Group with the focus of assisting IEOs, ICOs, and STOs with fundraising. He is also a Partner at a crypto law firm, IBL and has started a VC firm within the blockchain space, IBI.

What sparked your interest in getting involved in the Crypto and Blockchain industry?

I don’t have one of those cool stories about buying bitcoins in the early stages, but the fascination for the industry grew throughout late 2017 due to the business opportunities.

“It seemed like the right time, even though I knew nothing about initial coin offerings. Initially, I started networking like crazy, walking through the streets of Slovenia while on calls hours a day, picking the brains of talented people and asking questions where my knowledge was limited. This, in turn, allowed me to locate passionate people who shared my interest in creating something sustainable for the industry, making further research through books and online courses before we launched the company and received our first revenues as of December 2017. This is, by the way, the same procedure I am currently employing for setting up an infrastructure in the growing legal cannabis industry. It’s learning as much as I can, non-stop, and surrounding myself with people smarter than me.

“IBC was put together with a company mission to bring value, but at the time I did not know how I could contribute. Initially, there was a lot of hype surrounding the ICOs, and for the majority of 2018 the focus was on doing private placements.”

“Why would you focus on private placements when there was so much money in ICOs”?

We focused on both, however, my long-term focus on Private Placement is due to logic and understanding that hypes never last. During the initial coin offering hype, I saw first-hand how greed and markets overtake logic. Warren Buffett and Monger had a major inspiration on my different ways of perceiving the finance industry, and “I knew that if we did not get into private placements early we would not survive.” That proved to be correct and we not only survived the pop of the ICO bubble, but a major scam the company faced at the same time.

The early days of the industry have been filled with regulatory loopholes, which in turn led to a lot of legal complications following the hype. To make sure that we didn’t have a regulator breathing down our neck, we hedged against potential downturns and followed regulatory procedures point by point so that any legal complications following the industry hype would not affect us. “We were not specialized in ICOs, but in helping companies raise capital through legal means.” There is a reason I decided to become a partner at a Blockchain law firm, it’s risk mitigation for me, for IBC and for our clients.

“We still to this day lead the industry in private fundraising. Even though we are the largest player in the new IEO hype, private placement is still a core value proposition for businesses looking to raise capital.”

“Why IEOs & STOs and how can people find entry points?”

In terms of being registered on an exchange, it is a regulated form of raising capital.

IEOs are where the hype is. There is a very small difference, but a very important one. An Initial Exchange Offering is basically an ICO being led by an exchange. As a startup, you can find an exchange that will accept your listing and register it for trading on their user base, and from that point, they take over the process.

The exchanges vet projects with incentives to make sure they only accept good projects because they don’t want their users to get screwed. This long-term perspective is a major source of improvement, not only because their main source of income is from users trading tokens, but also because it solved the major problem of liquidity. After an IEO, users can directly start trading. The second major point of improvement is that the exchange has a lot more to lose than just one project. If they don’t follow the regulations, they are an easy target for regulators like the SEC. Small exchanges with fake volumes will not survive by only pumping out as many coin offerings as possible.

This puts the focus where it always should be, on quality projects, and hence the core reason for our success, we back quality projects only.

Even though the regulations are still not fully developed to prevent all scams, speculation bubbles like what happened with ICO through short term speculations are still possible due to the liquidity option, and can potentially increase the number of investors that can speculate, but for the long term health of the industry it is important to remember the ICO hype. It really is all about the projects, and in the during the ICO hype, there were also projects that were being created, some which still are being built, that were launched successfully or are about to be.

Just because 90% of startup companies fail, it does not mean that there is a shortage of good projects. Through continued search, one could locate the Amazon of crypto or another golden nugget that might last for the next ten years. Even the Dot Com bubble had a lot of companies that failed, and as we reach new frontiers of technology, it is without a doubt worth it to be a part of the game.

What is an interesting project for you?

First of all it is impossible to know one hundred percent what will succeed,” but to understand my mind regarding good investment projects I would recommend a TED speech by Ted Gross, which offers five factors to determine the success of a startup, which I personally follow in determining good projects; Timing, product, capital raised, business plan and team.”

 

You can have a solid business plan funded to build a perfect product like Apple has, with an excellent team and still fail without the most important factor, timing.

Is blockchain ready for the uber of blockchain? Simply put, no. The protocol is not ready.

I and my team always stress a few important questions when evaluating projects; Is the product ready for launching? Is it too early? Once this is done, we look at the other factors. “These are the factors I follow on a personal level in the decision-making process. Timing must align with what we are doing so that people can receive and use any product or service that we, or other companies, are launching.

“At IBC we are who we are not only due to an excellent team but because of timing.” We came in at the right time, early 2017, not late in 2018.

Final thoughts?

Since we are talking about IEOs, I could say that IEOs will probably have a hype surrounding their good fundraising mechanism, but honestly, we do not know the long-term outcome of any technological advances. The only real advice I can give is to make a decision on what is real now, and not on a prediction of the future. Plan for the future of course, but plan to be ready for the worst, don’t put all your eggs in one basket and diversify.

Especially in crypto.

It is crazy.

For any inquiries please message me on Linkedin, all other information you would be interested in regarding our companies can be found on my website, marionawfal.com.