Today, more and more new projects and startups appear in the blockchain sphere. It is noteworthy that instead of the usual venture financing, they are increasingly using ICO – crowdfunding technology to raise funds from investors.
The term ICO (Initial Coin Offering) appeared by analogy with the IPO (Initial Public Offering), meaning the initial public offering on stock exchanges. That is, ICO is the same IPO, only the role of stocks is performed by cryptocurrency tokens.
The essence of the technology is that the company issues its own tokens and sells them to investors for bitcoins or ordinary money. It really works as practice shows. Since the beginning of this year, thanks to ICO, about 130 cryptocurrency projects have appeared, that have gathered over $ 2 billion in investment.
On average, an ICO takes from 2 to 8 weeks, but a few more months (and sometimes half a year) go on preparatory work. How to complete all stages of the ICO successfully? Read our step-by-step instructions.
Step 1. Develop an idea and pre-announcement
First you need to decide on the idea for a future startup and find out whether it will be interesting to users. Be sure to study the market and analyze the experience of successful ICOs in order not to fly past the target audience.
You need to create a brief description of the project (Executive Summary) and post it on a thematic forum (for example, Bitcoin Talk) to get the opinion of the target audience. As a rule, feedback from users comes instantly – forum users discuss the idea, ask related questions, make suggestions on the functionality of the startup.
If users categorically reject the proposed idea or are skeptical about it, it is better to change the initial concept. If the response is generally positive, adjust the draft to reflect the comments and recommendations received. As a result, you should have an optimized business model and a public offer for users.
Step 2. Forming a team and registering a company
Among them should be programmers, marketers, copywriters, PR managers, designers and other narrow specialists. It is important that all team members speak English, because it is considered the primary language of the ICO and the main target audience is concentrated in the United States.
ICO, like other crowdfunding technologies, is practically not regulated at the legislative level. Many potential investors are eliminated due to the fact that they have no guarantees that on the other side they are a conscientious entrepreneur and not a fraudster and throwing.
Conducting ICO on behalf of a officially registered company and thinking through legal mechanisms for protecting investors (for example, reimbursing deposits in the event of a startup failure), you will increase your reliability in the eyes of investors.
Register an enterprise in a country with a blockchain-friendly jurisdiction of the United States, Cyprus, United Kingdom, Switzerland, Estonia or Singapore in order to avoid possible problems with the law.
Step 3. Development of White paper for investors
You creat a draft proposal for evaluation by users in the first stage. Now you need to create a clean copy with an attractive project description for investors.
For this purpose, White paper is being developed – a document explaining to the user how the project will work. As a rule, it is created in PDF format and then distributed in the Internet.
Investors do not like to read the long and tricky White paper. It is better to write a concise and lively description that will show the potential investor the benefits of your offer.
Do not forget that your goal is to sell your tokens to investors. Therefore, in the description of a startup, key attention needs to be paid, including their characteristics, what they are, what function they perform (this is shares, digital asset, payment instrument, or something else) and how they differ from already existing tokens.
Step 4. Website development and launch
The site performs several informative functions at once (telling users about a startup), advertising (promotes the project) and marketing (as a rule, the sale of tokens is carried out through the site).
At first, users will navigate to your site, just to learn information about a startup. However, with the beginning of the sale of tokens a huge flow of users will collapse on the web site. So just think about a good hosting, which will ensure the smooth operation of the site during peak loads.
It is a good idea to launch an email newsletter for subscribers when the site has already been created. Send out project news, reminders about the start of the sale of tokens, as well as links to the main documents (first of all, White paper and the offer) and useful information materials.
Step 5. Advertising and promotion in social networks
The most obvious option is to run ads through social platforms (Facebook, Reddit, Medium, etc.). Use all possible traffic channels, send White paper to potential investors and links to your website, translate basic materials into other languages and place them on foreign sites.
However, if you want to reach a wide audience and create really powerful advertising, you can not do without a full-fledged PR campaign. Regular marketers can also do some of the work, but for maximum effect, it is recommended to involve specialized agencies.
A special category is made up of the so-called business angels – experienced participants in crowdfunding programs, whose opinion is already considered expert and can greatly influence the decision of other investors. In order to inform them about your project and, under favorable circumstances, to enlist their public support, it is advisable to actively promote your project on rating cryptocurrency forums – for example, on the previously mentioned Bitcoin Talk.
A great advantage will be the placement of the project on popular ICO trackers – services that collect and analyze information on current cryptocurrency startups. Experienced investors invest in projects only after their approval on reputable trackers.
Please note that top trackers (ICO4You, ICOAlert, ICORating, ICOTracker, TokenMarket, etc.) charge for posting information. On average, their services will have to pay from 1000 to 3000 dollars.
To ensure that the bounty program does not turn into an aimless distribution of assets, set the entry threshold for participants. For example, 1000 subscribers for users of social networks or high authority on the thematic forum.
Step 6. Release Tokens
You can create your own tokens on BlockChain.org. But for this you will need at least a thousand dollars to get the source code in the blockchain and a team of high-class programmers (whose services can pull a few thousand more).
These include Ethereum, Waves, NEM, NXT / Ardor, Counterparty and BitShares. All you need is to register at the selected site, fill out the appropriate form (look for names like “Create Token”), purchase an internal cryptocurrency and exchange it for tokens.
In addition, if you are dealing with cryptocurrencies, then, most likely, you already had time to stock up on such popular today efiriums. And this means that you will not have to buy a new currency (for example, Waves or Nem) to pay for the creation of your tokens.
Step 7. Spread Tokens
All previous stages were preparatory, and only now it will be a question of clear ICO. Investors have been found, an advertising campaign has been launched, the site has been created – the time has come to sell our tokens.
If you created them on Ethereum, then you can easily trade your cryptocurrency on the Ethereum internal exchange. It will not be superfluous to create offers for the sale of tokens (offers) at other popular sites (for example, GateCoin, LocalTrade and BitFlip). So your cryptocurrency will become recognizable among active investors and traders who are constantly looking for profitable objects for investment.