Initial Coin Offerings (ICOs) has been a significant innovator in crowdfunding for startup companies differing from the global standard of Initial Public Offerings (IPOs). Although the ICO boom hit its peak in 2018, it can still be a great way to fund and lift the right project off the ground.
So what is an ICO?
ICOs are projects aiming to attract capital from investors within the cryptocurrency industry. By utilising blockchain technology and smart contracts to distribute projects tokens in return.
Traditional IPOs have highly regulated processes with investors purchasing equity in said company. Tokens are not inherently equity shares of a said company but are a digital representation with various utilisations depending on the company’s product.
Investors should ideally have the success of the project as their reasoning for partaking in the ICO.
Tokens can, however, be traded for value to other cryptocurrencies or back to Fiat cash upon the distribution.
So you want to launch an ICO. What are the essential steps going about it?
1: Matching necessity
With the fast-paced nature of the crypto industry, there has been much saturation of projects already implemented. To advance the potential of a successful ICO, you must ask yourself whether your product has underlying value and innovation that can be adopted and enhance the current crypto and blockchain market.
2: Product Development and Deployment Strategy
So you’ve concluded that your product is worthwhile and have decided to go ahead with an ICO.
Although ICOs have launched with an MVP or at a BETA stage, it is highly advisable to have a system already set in place. The further the project is to actualise itself on the market, the higher chances for investors to jump on board.
3: Token creation
Essentially the breakdown of distributing the value invested utilised in your business, much like an IPO share. A token may be a representation of many use cases. The most obvious is as a digital coin, but with blockchain innovation that today can represent various value representations in many industries such as gaming, energy, gold, De-Fi, and many more.
Part of the token creation also demands how much token percentages to distribute to founder ownership, development, marketing, and investors.
Token creation can be implemented via multiple platforms, the most popular being Ethereum. Its ERC-20 protocol holds the most market adoption, with others such as Waves and Cardano to look out for with its imminent smart chain deployment.
4: The whitepaper
A whitepaper is a document to be proposed to the viewership of potential investors, essentially the pitch, business and marketing plan wrapped into one. It must detail all the technical aspects of your product as clearly as possible, what potential obstacles, who the team is behind the project, and what development steps towards a collective strategy to bring the project to fruition. The white paper is a complex document that can make or break the launch of an ICU. It will undergo intense scrutiny by investors. Hence clarity and transparency are essential.
Have a solid legal team look over this to ensure representation and regulation are vetted and compliant.
5: Marketing the project
Just as any launching financial endeavour, community awareness is essential. Achievable via paid agencies or social media influencers, crypto forums, web pages dedicated to ICO calendars, launching multiple engaging social media pages for the platform, etc. But a comprehensive strategy is vital to ensure that your potential audience hears about the project and interest is built towards investment.
ICO project success
In the hopes that you have reached your investment goal and launch the ICO, make sure to continue with investor communication on the progress. Do your best to follow the timeline roadmap entailed on the white page. Also, listing the tokens on exchanges is vital to establish value for investors and the company.
You have now joined the ranks of innovations of global financing. With all that said, good luck!