Why haven't ICOs become a thing for smaller businesses that need to raise capital?

[Semper]

A friend owns a small resort in SEA that works very well. We were discussing ways to raise capital for a business of that nature to expand and open more locations internationally. One of the ideas that crossed our minds was to raise capital through an initial coin offering (ICO), which would give token owners a stake in the business.

This seems like the perfect instrument to raise capital for small and medium-sized real businesses that cannot afford an IPO. Yet, after some research, I haven't been able to find any real companies that have raised capital in this manner, as if it were an IPO. Instead, it's mostly scams and digital projects that make zero sense.

Why do you think this method has never really caught on as a way of raising capital in the same way IPOs have?

 

[TheCryptoAnt]

A combination of too many scams, not many people that actually have the means to be investors in businesses are crypto native , and that why on earth would I do this when we can have a agreement with legal enforcement in place?

etc etc

Like they are cool as a concept but for anything remotely serious I dont think they are what people want.

 

[Bruce flea]

I went through the same process few years ago, like what @TheCryptoAnt said but the main challenge was
"Investors get stake in the business " once you promise returns or distribute "profits" you automatically fail the howey test and subjected to securities regulations. registering as security is a whole different headache.
With that being said I think RAW tokenization will become a thing sooner or a later once there is more infra and regulations.

 

[sebastian]

I really like the idea OP, but I also buy in on the arguments from the other posters @TheCryptoAnt has most often the right answer to crypto I learned