It is critical to have a well-thought STO marketing strategy in order to achieve a successful STO launch and sale.
STO, if it is your first time coming to the term, are security tokens that represent the ownership and the rights entitled with securities. In other words, security token holders are entitled to many rights like equity, dividends, profit sharing rights and etc. With the advent of blockchain technology, all these rights can be coded into a smart contract and traded as a token.
When it comes to STO marketing, new models of marketing are required. The mass marketing strategy that worked so well for ICOs due to things like Telegram communities, large Twitter followings, and endorsements from influencers, is not applicable to STOs. This is because STOs are tailored strictly for accredited investors. Thus, a successful STO marketing should focus specifically on reaching only the accredited investors who are actually capable of participating in the offering.
What’s the cost of launching an STO
To launch a successful STO, you will need to take into consideration the following costs:
- Token Issuance — — ~5000$
- STO Marketing — — ~100 000$ +
- Legal + Incorporation — — ~50 000–100 000$
- Security Audit — — ~15 000–50 000$
- Whitepaper — — ~0–15 000$
Moreover, you will need additional expenses such as salaries, travel expenses, exhibitions and etc. Depending on your project and the amount of money you wish to raise, the cost of launching a successful STO could go as high as half a million or even more.
Regulatory Considerations for STO Marketing
It is paramount to conduct your own due diligence and research about the region where you are going to be based. This is because each region has its own regulations and potential exemptions that the company could exploit. These jurisdiction-based regulations will also influence the way you structure and issue your security tokens.
To find out these nuances, it is best to discuss with legal experts or conduct research starting from the regulatory body’s website. For example USA — SEC (Security and Exchange Commission), Europe — ESMA (European Securities and Markets Authority, Singapore — MAS (Monetary Authority of Singapore).
STO Token Issuance
Unlike utility token that you can easily issue on your own, this is not possible with STO token issuance. The security token must be issued through one of the approved platforms that meet the required legal aspects. For example, the issuance platform would usually create a smart token and a token. Some of these platforms include Polymath, Harbor and more. You can read about them here. Additionally, the regulations specify that token issuers must be accountable for their actions.
What do you need to launch STO?
You also need to think about where they will be traded. To have your security token available for liquidity, you must trade it only on approved Security exchanges like tZERO, Open Finance, and Orderbook. Notably, ICO exchanges that are centralized won’t be accepting security tokens for the fear of being persecuted.
It is essential to have a well-balanced team formed. This usually takes quite a bit of time. First, make sure you find experts that can deliver a smooth sailing down the line and onboarding them.
Second,when thinking about the project team, it is essential to have a diversified team with professionals from different industries like legal, sales, marketing, IT. They will serve as the main driver for the STO launch.
Furthermore, when the team is formed it is essential to have time to prepare the analysis of the STO launch platforms, marketing materials, analysis, and plans and for those who are a bit behind the crypto knowledge to catch up.
This period can take anywhere from a couple months to 6 months.
At this stage, it is probably clear. It is preparation for the marketing materials, finalizing legal structures, finding partners if needed be like marketing agencies, advisors, KYC/AML providers and etc, website, writing whitepaper.
As a guideline the whitepaper should include the following:
- Legal Disclaimer
- Product Details
- Industry Overview
- Technical Architecture
- Business Model
- Marketing Strategy
- Assets and another type of security associated with the token
- Tokenomics and Token Usage Details
- Team members and advisory
This is Probably the easiest of all steps. Initially, you’ll need to choose the provider like Polymath, create an account and register token symbol. It’s that simple. However, do not forget to include start/end dates, hardcap, and accepted payments.
STO Marketing Campaign
Your STO marketing campaign will definitely involve heavy promotion to raise awareness and spark interest. This includes channels such as blogs, press releases, events, and social media promotions as well as guerrilla tactics like traditional roadshows, mail marketing, and market influencers. It is a stage to promote to the general public and close the VC deals that you have started in the preparation period.
However, make sure your legal team is strong to ensure that you are aware of what you are able to promote and what you cannot. Keep in mind that there are laws against promoting certain types of investments.
In conclusion, we see STOs as the next big thing after the ICOs. STOs offer a great and clear way to raise funds with a clear value proposition for the investor. However, STO is still in its infant stage and the market, regulations and the methods of launching STO will definitely change with time.
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