Telegram’s USD 1.2bn ICO Divides Investors

Some investors are skeptical because they believe the ICO’s lockup period will basically freeze participants’ funds for an unspecified time period

by Pavel Velichkov
27 January • 2 min
In News

Messaging app Telegram announced earlier this month it plans to raise USD 1.2 billion through an Initial Coin Offering (ICO), creating a big fuss in the crypto world. However, some major crypto investors like Andreessen Horowitz, Union Square Ventures and Bessemer Venture Partners have reportedly decided against investing in the ICO, while new players are seen joining in, recode writes.

The new players seem to be considering this not as an investment in yet another cryptocurrency, but rather as an investment in a product that has the potential to attract many new consumers. The funds that Telegram hopes to raise will be used to create and support a payment system.

 

Telegram’s ICO polarizes opinions

The problem in Telegram’s ICO, as seen by investors who turned it down, is that all the hope people put in this venture relies on the assumption that all Telegram users would be interested in using this cryptocurrency, and this simply cannot be true. Another issue is that nobody knows exactly how venture companies are going to get their return on investment if the project turns out successful, which is a problem valid for all ICOs.

There are those who are not inclined to trust the ICO because of Telegram’s controversial CEO Pavel Durov and his background. Others are just not really amazed by the technology used and say it’s nothing new.

Some investors are sceptical because they believe the ICO’s lockup period will basically freeze participants’ funds for an unspecified time period; what they recommend is investing directly in the currency and hoping for the best: to ride the value-rise wave.

 

What is More to be Taken into Account

One of the things that make Telegram’s ICO different is that there isn’t one or a few whale investors; around half of the money is expected to be raised by the public. Another interesting statistic is that most of the funds are probably going to come from outside the US.

Investors in Telegram’s ICO believe they will be able to take part in funding and developing something big. They consider that the ICO offers a safer and easier way of investing in the crypto economy as Telegram already has a well-developed network in place. Investors are not afraid that the platform could fail, simply because it has already been built and it has yielded results over time.