“The graveyard is the richest place on the surface of the earth because there you will see the books that were not published, ideas that were not harnessed, songs that were not sung, and drama pieces that were never acted.” This a quote by Myles Munroe, a quote I often tell my students when I teach them the various way to earn money online. A big reason why all these ideas and dream go to the grave is that the people who had them never managed to find the funding for their ideas. If you find yourself with a similar position why don’t you consider raising money through an ICO?
With the rise of blockchain and cryptocurrencies came a new way to raise money for startups. According to icodata.io in 2016 ICO’s raised around 90 Million dollars which shot up to 6 billion dollars. It is clear that ICO is a very exciting vehicle to raise money for that idea you never managed to find capital for.
What is an ICO?
Initial coin offering (ICO) is a fundraising mechanism which uses cryptocurrencies. Your idea or project will create crypto tokens and sell them for cryptocurrency like bitcoin or for traditional currency. It is similar to IPO (initial public offering) were you are selling shares to your project in exchange for money but with ICO’s the investors have little to no rights to your project. Investors overlook this as early access to a new cryptocurrency at a low cost can see a high return on investment like in the case of ethereum. During their ICO each token cost $0.40 but today it’s well over $200 so u can see the high return on investment in this case.
Now let’s see how you can launch your very own ICO
Step 1: Evaluate your idea.
If it’s not clear by now your idea has to have cryptocurrency as a major component of how it works. If your idea does not need tokenization then, unfortunately, ICO is not for you. If you try to pursue an ICO without this in mind the chances of failure are high.
According to coinmarketcap.com, there are more than 2000 cryptocurrencies, so the competition is fierce, so make sure your idea solves a problem better than any other possible competitor in the market you are targeting as this will give your coin the best chance for success. To achieve this a lot of research is going to have to take place as you have to understand the market you are targeting as well as the potential customers who will find your solution good enough that they are willing to pay for it.
Step 2: Evaluate the competition
It is important to analyze the completion as the reality of the situation is that the pool of investors are the same and it’s unlikely that they will invest in every ICO that is launched, therefore every ICO that is launched at the same time you plan to launch yours is your competitor. Check ICO listings websites to get this information. Below is a few ICO listing website which will give you an idea of what it takes to launch an ICO.
Step 3: Legal research
ICO advisory firm Statis Group conducted a research that revealed more than 80 percent of ICOs conducted in 2017 were identified as scams, you can imagine that regulation was introduced to try and avoid this which resulted in ICOs being the most regulated aspect of cryptocurrency. So it’s important to check if ICOs are even legal in your country.
Once you find out the regulations that your country has placed on ICOs research on ways to navigate them as this could make or break your attempt to launch your ICO. Even if there isn’t any regulation now so find out if there are any regulations being planned by your government.
Step 4: create your ICO token
You have done all the hard work now it’s time to create the actual coin/token and platform you will being to sell you cryptocurrency. Remember that the value of your ICO comes from the idea you have so it’s important to have a clear plan on how many stages of fundraising you will have and how you plan to distribute your tokens within each stage.
There are usually three stages of fundraising:
Private sale: this first stage of fundraising. Officially launching an ICO cost quite a bit of money so at this stage, you are looking for investors to fund the actual launch of your ICO. You attract investment through offering discounts of up to 50% and exclusive benefits that your idea can offer as it’s usually a closed token sale.
Pre-sale: this is considered the most profitable stage for investors and the price of the token will be lower than at the official launch and hence they buy your token at this stage to sell it on the day of the token sale. It’s considered a form of short-term investment.
Token sale: at this stage, the token is open for sale to the public to buy from your platform or from crypto-stock exchanges.
Now that you understand the stages of sale you now need to consider how the tokens will be distributed. You have to consider the following below when making your plan.
- How many tokens in total will you create
- How many tokens will your team receive
- How many tokens will be sold at each round of fundraising
- Decide on the scenario in which new tokens will be issued
Lastly, you need to consider which blockchain platform you token will use. Most use the ethereum platform as it is secure but also cheaper than creating your own but depending on your budget creating your own give you the ability to customize the blockchain to your except specifications.
Step 5: write a white paper
A white paper is basically the business plan for your idea you have. It an in-depth look at what exactly you want to do, how you plan to achieve and all the people who will be involved with your idea. The White Paper you produce will be marketing plan and technical manual and should avoid incoherency and fluffy substance.
As your white is going to be read by different people, ranging from people with a deep understanding of cryptocurrency to non- technical people your document should have a semi-technical explanation of how the ICO works and an easy-to-understand walk-through for non-technical investors, so make sure it includes the following:
- The vision of the project
- Development strategy
- Goals and architecture of the token
- Information on the token and its distribution plan
- Legal issues
- Market analysis
- Available resources
- Description of your team
- Early investors
Step 6: Launch a website
Since ICO is a digital asset and mainly operated on the World Wide Web it makes sense to have a website were potential investor come to find out about your project. You can have your white paper there and have it sell tokens. Since your website will be doing so many critical things, first priority is to have very good security especially if you are going to be selling your token on your website so make sure you hire to security specialists.
The layout of your website is also very important. Your website is how many potential investors will learn about your project so it’s important to have a website that is easy to use and also prove all the necessary information they need to understand the project. I have a few suggestions of what a good website would have below:
- Presentation video
- Description of your ICO
- Your team’s profiles
- Real-life cases of how your product works
- If you have had any press coverage please include it on your website
- Profiles of partners, advisors and early investors
- Documentation (Term of service, legal documentation, white paper)
- The roadmap of your ICO
- Contact information including links to relevant social media accounts
- Subscription form so you can capture information of potential investors
Step 7: Marketing
It goes without saying that no matter how good your idea is if no one knows about it no one will invest in it so it’s important to dedicate a portion of your budget to marketing. A well-planned PR campaign will be crucial, so make sure you take advantage of Google ads and forum ads and focus on building a community around your ICO and chances of getting funding increases.
I hope you find this information helpful and consider launching your own ICO.
I would love to hear your options on my article, please leave a comment on what you think or you can follow me on twitter @ayodel6 and we can have a discussion about it.