Initial coin offerings (ICO) are still popular in 2021 despite the emergence of new crypto fundraising models like IEO, STO, and IDO. The ICO space is just getting bigger and bigger as new projects continue to hold successful initial coin offerings.
What is an Initial Coin Offering?
An ICO is a fundraising method in which blockchain startups and companies raise funds for their new projects by issuing cryptocurrency tokens or coins in exchange for Bitcoin, ETH, or any other crypto or fiat currencies. ICO offers a wonderful opportunity for companies to issue crypto coins that have the potential to increase in value in the future. If this comes to pass, early investors will recoup amazing returns.
The first ICO was launched in July 2013 for Mastercoin (now Omi). Since then, thousands of ICOs have been conducted and a total of USD 12 billion have been raised through initial coin offerings. ICOs are advantageous for startups as they are not subject to the fundraising regulations imposed on banks and venture capitalists and instead offer simplified procedures to ease the process.
How to launch an ICO
Raising money through an initial coin offerings involves three simple processes. Firstly, the cryptocurrency startup or project creates a whitepaper (similar to an IPO prospectus) detailing among other things, what the project is about, what the needs the project aims to fulfill, and how long the ICO campaign will run. Alongside a whitepaper, the project company may also issue a “yellow paper” which explains the project in more technical detail, such as complex calculations regarding the cryptocurrency structure, value, and creation. In the next step, the company issues their coins or tokens through which investors through relevant ICO platforms. These tokens represent utility in the form of future products or services delivered by the company. In the event, the funds raised do not meet the minimum amount required by the project, the money is returned to the backers and the ICO is deemed unsuccessful. The company may choose to rely on an extensive marketing campaign in order to ensure that a large number of investors are acquired before the sale of tokens actually begins. However, if the fund requirements are met within the specified timeframe, the money is used to further the company’s goals.
ICO Marketing Strategy
In order to create and execute a successful ICO campaign, you need to have the right strategy that will enable you to attract investors and the funding you require.
Have a road map
Like any company, a successful launch of an ICO requires you to understand your product, target audience, and growth strategy.
Usually, this starts with an informational document in the form of a white paper. This document is a first-class general description of your project and serves as a technical plan for your project. Your whitepaper should be accompanied by a roadmap that documents your schedule and provides investors with reasonable expectations for its launch.
Once you have the necessary guideline for your product established, develop a plan that includes a price and protection strategy for your investors. Depending on your product and use, specific legal qualifications provide parameters for its release.
There are several price models, including an indeterminate price, a fixed price, a Dutch auction and an ICO price increase. Also important are discounts and rewards for investors that can be vital in attracting the first investors.
Assemble a proven team with the ability to execute
When starting an ICO, relationships are everything working on the project alone will not get your project very far. Keep in mind that you need a team of skilled professionals who can account for every aspect of the launch of an ICO. An experienced team is of great value to the project. Look for people who have a passion for blockchain technologies, and aspire to make an impact in their life and career.
Developers with established backgrounds, markets, strategists and legal advisors can help you turn your ICO ambitions into a successful launch strategy. You can use platforms like Upwork or Fiverr to recruit talented professionals if you do not have everything covered in your company. There are even entire ICO marketing agencies that work with ICO projects to help fill the lack of talent within their companies.
Community building
The most effective part to get more and more audiences to support your ICO is to validate the crypto community. Having a sprawling white paper loaded onto a fancy website incensed with “shock and awe” vocabulary all on the wheels of a moot road map is no longer enough to attract a following of users, much less the attention of serious investors.
Projects must adopt of “community first,” approach under which the project focuses on the opinions of its community members in development matters, rather than their own vision. The feedback of the community becomes a kind of democratic instrument in project traction and popularization as a product tailored for the users, and not for the founders alone.
Hiring an influencer who has stronger skills in communication and language will assist you in carrying the attention of the customers and visitors and will make them trustees to invest in your ICO. Furthermore, social media plays a key role in fostering such a community-oriented approach, as it is becoming the key communication instrument in spreading the word about a project and garnering support. By resorting to the community-first business model, you will be able to attract significant numbers of followers for product testing and application, which also raises awareness about the ICO in investor circles.
Business viability and technology check
Too many projects dive into ICO without even having a complete overview of their technology’s capabilities. Ideas are good, but they won’t satisfy your investors for long if unforeseen problems keep piling up or if your idea turns out to be unfeasible from a technology point of view. Moreover, the design of your technology needs to match the legal framework of your token economics. Technology and Legal have to be aligned at all times.
If you already have a beta version of your technology, don’t sit on it. Scalability and security are often underestimated. Take the time and invest in various independent smart contract reviews and audits as well as security test runs. Ask yourself how blockchain technology is adding value to your business and keep in mind that small mistakes can have a big impact.
A well-defined marketing strategy
Community building and PR strategies are essential tools to help you stand out in the industry. Before you start, set a solid marketing budget (about 5-10% of your IEO fundraising goal) to ensure that you can effectively promote the project. For ICOs, a marketing campaign includes social media marketing and web advertising, but also direct communication and a demonstrated influence in the crypto industry.
Communicate your goals and progress every step of the way in today´s social media such as Facebook, Twitter, and Reddit. Many ICO´s are also developing their conversation in Discord, and Telegram messages. All of these platforms are valuable marketing channels for an ICO. These tools & channels also form communities that allow you to connect with your customer base after the ICO launch.
Publishing quality content on specialized and trusted websites will help you build your reputation within a targeted audience, helping you gain the trust of potential customers and investors, which we know can be critical.
Transparent ICO process
When it comes to the financial aspect of the ICO process, our best advice is to play it safe. Leave nothing to chance. You are navigating in an indistinct world, being reliable and professional is your best asset when it comes to distinguishing yourself and securing a successful outcome to your ICO.
Offering large discounts may seem like a good incentive at first, but it will only display you as an unprofessional actor. Yes, discounts are expected during pre-sales, but be aware that large discounts might mainly attract investors looking to flip our coin as soon as the sales are over, with the risk of your token’s price dropping at a vertiginous rate.
Transparency is as essential as safety. Start by gearing up your wallets with the highest possible security features. We also advise that all the transactions be fully automated and included in a smart contract. Last but not least, all the funds raised should go into an escrow account with multi-signature functions to ensure trust between all stakeholders.
Building a reliable and trustworthy ICO project will most likely bring you success, but it is also decisive when thinking about listings. Having your token listed on an exchange is a game changer, as its value will be assessed with regards to the tokens it can be exchanged for. With Exchanges, liquidity is key. Most ICO launchers await until the closing of their offering to start looking for exchanges. Not thinking ahead can have you and your demanding community wait months before an exchange agrees to list your token. Engaging with an exchange before even launching your ICO helps the visibility of your project and can get you listed faster after you successfully closed your offering.
Do you need assistance with your ICO marketing campaigns? Get in touch with our crypto marketing experts to discuss your needs.
