Fortune: Term Sheet — Friday, Aug. 4

Think the current ICO craze has peaked? Think again. LA-based venture firm Science said this week it will launch an ICO to raise up to $100 million to invest in…blockchain startups:

Startup incubator Science, which invested in companies such as Dollar Shave Club, is launching a blockchain-related incubation program […]

The firm is targeting about $50 million to $100 million in the offering, according to people familiar with the matter.

Los Angeles-based Science is using its ICO—which it plans to launch in pre-sale for select investors only on Sept. 18 and release to the public on Oct. 2

If all goes well, perhaps those startups incubated by Science will have ICOs of their own which can then beget more ICOs until the world’s Internet pipes are utterly clogged with worthless digital tokens.

This is an exaggeration of course and perhaps not fair to Science, which has a successful track record nurturing new companies. But still there is something odd about an incubator having an ICO: it’s almost like crowdfunding a vehicle for crowdfunding. Why not just, you know, solicit funds from limited partners and invest in promising startups?

For one thing, it’s more work. A conventional fund can involve a lot of legal lifting and fussing around with shares. An ICO by contrast lets a company whip up some tokens on a blockchain and start selling with no fuss, no muss.

For example, five people from an outfit called “Cloud With Me” came into Fortune’s office last week and said with a straight face they are raising $300 million by selling tokens to a blockchain platform that will disrupt the cloud businesses of AWS and Microsoft Azure. Asked about corporate documents related to this remarkable raise, they suggested the ICO process made this unnecessary. And sure enough the ICO is underway and is “going well” in the words of one member of the team. All this even though the Cloud With Me website contains little beyond a white paper and a place to buy tokens—with bitcoin, ether or credit cards.

Even the SEC and its recent “Yes, DAO, those tokens are securities” ruling can’t stop the fun. One reason is companies not based in the US can keep right on selling tokens on the web without much fear of SEC interference, while other firms are relying on exemptions or arguing the tokens really serve as digital tokens for services and are not securities.

This can’t go on forever. At some point folks will realize these billions (or quite possibly trillions) of tokens are digital dust backed by little strategy and even less governance, and will stop buying them.

On the other hand, maybe ICOs really are the future of financing and the surge of token sales reflects a bigger pool of investors. As Andreesen’s Balaji Srinivasan pointed out in an outstanding essay in June:

However, when considered as an alternative to classic equity financing, token sales yield a >100X increase in the available base of buyers and a >1000X improvement in the time to liquidity over traditional methods for startup finance. The three reasons why: a 30X increase in US buyers, a 20–25X increase in international buyers, and a 1000X improvement in time-to-liquidity.

So it really could be up-up-away in ICO world for years to come. Well, that or a cruel reckoning come Fall.

COINBASE FLIP FLOPS: The biggest digital currency exchange has caved in and agreed to support withdrawals of bitcoin’s breakaway currency, Bitcoin Cash, by January. The decision came after the Internet seethed for days at Coinbase, which had earlier said it wanted nothing to do with the new “Cash,”  and customers made rumblings about class action suits—which could still happen.

There are several explanations for the flip-flop, including the legal peril of not releasing what many regard as customers’ property. There is also Coinbase’s official explanation that it doesn’t want to deal with Bitcoin Cash until it can be sure of the new currency’s cryptographic integrity. Sources at the company also say quietly it’s a pain in the neck to build a new product they don’t even want.

My theory: Coinbase hated the idea of a faction of miners forking the blockchain because such forks might threaten the overall viability of bitcoin. So it decided to take a hard line and advise customers who didn’t like the “no Bitcoin Cash” policy to hit the road—and in doing so delegitimize and devalue the new currency. No such luck though as prices soared, customers became furious and legal trouble loomed. Coinbase gambled the fork event would blow over, but lost and now they have a big mess to clean up.

• Grand Jury.

• The one thing Congress agrees on that could transform the company.

• 20 companies get 37% of all the H-1B visas.

• Where Avon’s CEO went wrong.

• How a Chevy Bolt beat a Tesla Model S.

• Lol, ice cream is not health food.

• Why the FBI arrested the hero who stopped the WannaCry

…AND ELSEWHERE

Ad agencies say Snap is alienating advertisers. Uber knowingly leased unsafe cars to drivers. Inside Patreon, the economic engine of Internet culture. Have smartphones destroyed a generation? Travis Kalanick hires a “CEO advisory” firm. Drowning out the fake news. This guy.

ICYMI

This week Term Sheet discussed direct listing IPOs, Uber’s markdowns, why those markdowns happened and what they mean, Snap’s index status, VC confidence, consumer Internet turnaround stories, Mondelez International’s dealmaker-in-chief, Nin.Vc, Nin.Vc, 500 Startups, Greylock.

Here are the editions: M / T / W / Th

• BlueteamGlobal, a provider of cyber threat and security services co-founded by ex-Morgan Stanley COO Jim Rosenthal, raised more than $125 million from undisclosed investors. Read more at Fortune.

• TrackR, a Santa Barbara, Calif. maker of wireless tracking devices for locating misplaced items, raised $50 million in Series B funding. Steve Murray at Revolution Growth led the round, and was joined by Foundry Group, Amazon Alexa Fund, DoCoMo Capital, The Glenmede Trust, and Bespoke Strategies.

• rfXcel, a San Ramon, Calif. provider of regulatory compliance services, raised $30 million in funding. Kayne Partners led the round.

• Wasabi Technologies, a Boston provider of cloud-based storage services, raised $10.8 million in funding. Investors include CloudScale Capital Partners.

• Tokyo Smoke, a Toronto-based cannabis company, raised C$4 million ($3.2 million) in Series B funding. Aphria and Green Acre Capital led the round.

• Buy It Installed, an Irvine, Calif. automated provider of installation services,raised an undisclosed amount in Series A funding from Skyview Ventures, Tech Coast Angels, and the ACE Fund.

•  Bread, a New York-based provider of white-label services for retailers, raised and undisclosed amount of funding led by Menlo Ventures, along with Bessemer Venture Partners and RRE Ventures. (The company said it raised $126 million but refused to say how much of that was debt and how much was equity.)

• Auris, a San Carlos, Calif. health care company developing less invasive medical interventions, raised $280 million in Series D funding. Coatue Management led the round, and was joined by Mithril, Lux Capital, and Highland Capital Partners.

• Paysafe Group (LSE:PAYS) has agreed to be acquired by Blackstone (NYSE: BX) and CVC Capital Partners for £3 billion ($3.9 billion). Read more.

• Gatekeeper Systems, an Irvine, Calif.-based manufacturer of shopping carts and trolley containers for retail stores, acquired Carttec GmbH, a Eislingen, Germany distributor of cart containment and loss prevention services. Gatekeeper Systems is backed by Hammond, Kennedy, Whitney & Company.

• General Atlantic invested an undisclosed sum in Karvy Computershare, a Hyderabad, India-based provider of investor and issuer services for the asset management industry.

• Google (Nasdaq:GOOGL) reportedly offered $30 billion to acquire Snap(NYSE:SNAP) in early 2016, according to Business Insider. Read more.

• Yelp (NYSE:YELP) agreed to sell Eat24, a San Bruno, Calif.-based food delivery app, to Grubhub (NYSE:GRUB) for $287.5 million in cash. Read more at Fortune.

• Callaway Golf Company (NYSE:ELY) agreed to acquire TravisMathew, a Huntington Beach, Calif. golf apparel retailer and manufacturer, for $125.5 million in cash.

• Salt Creek Capital acquired Network Distributors, a Dubai-based supplier and value-added distributor of information technology security and mobility services in the Middle East.

• Accenture (NYSE: ACN) acquired Search Technologies, a Herndon, Va.-based technology services firm. Terms of the transaction were not disclosed.

• Daiwa Securities Group, a Tokyo-based securities broker-dealer, agreed to acquire Sagent Advisors, a New York-based investment banking firm, and Signal Hill Holdings, a financial services firm. Daiwa will combine the two firms to create DCS Advisory, a new North American-focused M&A advisory firm.

• Anaqua, a Boston-based provider of intellectual asset management software, agreed to acquire Lecorpio, a Santa Clara, Calif. developer of end-to-end IP management software.

• Japan Tobacco (TSE:2914) agreed to acquire PT Karyadibya Mahardhikaand PT Surya Mustika Nusantaraon, an Indonesian-based maker and distributor of “kretek” tobacco and clove cigarettes, for $677 million, according to Reuters. Read more.

• JC Flowers is considering listing NIBC, a Dutch bank, in early 2018, according to Reuters. Read more.

• Elio Motors, a Phoenix-based automobile company, filed to raise up to $100 million in an initial public offering. It plans to list on the Nasdaq under the ticker symbol ELIO. Drexel Hamilton serves as the bookrunner on the deal. Pricing terms weren’t disclosed.

• Bristol-Myers Squibb (NYSE:BMY) agreed to acquire IFM Therapeutics, a Bonn, Germany-based biopharmaceutical company, for $300 million, according to Reuters. IFM Therapeutics raised $27 million in funding from backers including Atlas Ventures and Abingworth. Read more.

• PROS (NYSE:PRO) acquired Vayant Travel Technologies, a Sofia, Bulgaria-based provider of airfare pricing and shopping services, for $35 million in cash. Vayant Travel raised $5 million in funding from Lufthansa and NEVEQ.

• Prezio Health, a Troy, Mich. medical instrument repair company owned by Frazier Healthcare Partners, acquired Northfield Medical, a Glen Allen, Va. seller and distributor of orthopedic products from Prairie Capital.

• Global Payments (NYSE: GPN) agreed to acquire the communities and sports divisions of Active Network, a Dallas-based provider of cloud activity and participant management software, from Vista Equity Partners for about $1.2 billion.

• Nielsen (NYSE: NLSN) acquired vBrand, a Tel aviv, Israel developer of an AI data platform for sports marketing. Financial terms were not disclosed. vBrand raised $2 million in funding from Nielsen Innovate and Wellborn Ventures.

• Snow Phipps Group acquired Ideal-Tridon Holdings from Industrial Growth Partners. No financial terms were disclosed.

• Caltius Equity Partners sold DHR Services Holdings, a Phoenix, Ariz.-based provider of HR services, to Oasis Outsourcing.

• Southfield Capital, a Louisville, Ky. private equity firm, raised $200 million for its second fund.

• Vintage Investment Partners, an Israeli investment firm, raised $215 million for Vintage Investments X, its fourth secondary fund.

•  GC VR Gaming Tracker Fund, a fund operated by Greycroft venture partnerJon Goldman that’s focused on cVR, AR, video games and e-sports companies, has raised $16 million.

• Mamoon Hamid will join Kleiner Perkins as a general partner. Previously, he was the co-founder of Social Capital.

• Stephen R. Bolze will join Blackstone (NYSE:BX) as a senior managing director of the firm’s infrastructure business. Bolze is the former president and CEO of General Electric’s (NYSE:GE) power business.

• John Teza has joined NRD Capital Management as a director.

• Cesar Gueikian has joined Monroe Capital as a managing director. Previously, Cesar was a founder and managing partner at Melody Capital Partners.

• Edgar Chiu has joined SparkLabs Taipei as a managing partner. He was previously the COO of Gogolook.

• Zach Hamilton has left Venture51. Along with Logan Jugler, he is launching General Crypto, a hedge fund that invests in cryptographic digital assets.