The ICO craze that swept the globe in 2017 started a financial revolution. As a technology lead boom this was appealing to a new range of investors. Ranging from geeks to those just wanting to be part of the opportunity to disrupt the government and corporate dominance of finance.
And with nearly 1000 ICOs now completed, with the largest exceeding one billion dollars in contributions, it is clear this is only the start of this massive change. However what the end result will look like is far from clear.
As regulators began to clamp down on the ICO space, the market did begin to cool, as Ethereum creator Vitalik Buterin predicted in 2017, the end of the craze represented a “maturing” of the market. Both regulators and investors have become smarter, and the services that are offered through ICOs represent more legitimate and valuable offerings.
As part of this maturity, a growing number of existing companies have chosen to utilize blockchain technology and hold ICOs of their own. Keypasco from Sweden who is already a big player in authentication is a good example.
With all this change and opportunity still lies the chance for companies with a long term business model to raise money through the ICO process.
Step #1: Decide if an ICO is Right for Your Company
The question is simple: would your company and its client base benefit from the addition of blockchain technology? There’s a reason that blockchain is so popular: its immutable and decentralized nature offers new levels of security, cost reduction, speed, and transparency. Competition is also important to keep in mind as you may not want to be pitted against a blockchain version of your own company in the future.
And, of course, ICOs provide access to a global investor pool. And with the geek profile in the mix it’s a group that can understand highly technical concepts that would go straight over the heads of the traditional finance community.
Still, not every business works better with blockchain. However, if you believe that blockchain would open up new technological possibilities for your business, then…
Step #2: Plan, plan, plan.
Your potential investors are now a lot more careful and will be keeping a close eye on the way that your company plans to use the funds raised during its ICO.
To make an ICO run smoothly getting the structure right upfront is imperative. This includes, the technical solution, operations, and legal aspects. As the market has matured you can now choose experienced advisors to assist in each functional area.
Step #3: Ensuring Your ICO is Compliant
Regulators have moved into the ICO space, however in most countries the regulations that have been proposed are far from final. Therefore, staying aware of how regulations affect the legal status of your company’s ICO requires professional help.
You also have the opportunity to gain external certifications so that potential investors know you are running something legitimate. At Tokeny we offer a process called SICOP Compliance which defines a methodology to conduct successful, secure and sustainable Initial Coin Offering (ICO) by standardizing good practices and ethical rules.
In addition the Tokeny tokenization solution offers KYC and AML checks to make sure that the money raised is not from a criminal, a terrorist, politically exposed person, or corruption.
Step #4: They don’t market themselves any longer!
To run a successful ICO you need to run a sophisticated marketing campaign with enough budget and lead time to create the awareness required. And with an ICO you only have one chance to get this right. It is not like a normal marketing process where you have the opportunity to learn from mistakes. You really need people that have seen what works and what does not in this process and kick off your campaign already fully optimised.
In 2017 it was enough to do airdrops and build a Telegraph community. This still works but now only pulls in the low value investors. It’s important to ensure that your ICO is reaching the correct investor base, both in terms of, investment capability, interest level, and legality. Additionally, easy to implement marketing tools like crypto-related advertisements have been banned on quite a few platforms, including Twitter and Google.
The ICOs that have been successful in the last six months have also been running roadshows. You need to plan the time and budget to be shaking hands and speaking at events, as many of the higher value investors want to meet you in person. And due to the nature of an ICO this is a global process and needs to be well planned for and managed.
And finally on marketing, the really great thing about an ICO is when you run this campaign you have not only raised the money for the project but built a loyal community of users faster and with more buy-in than any other marketing method open to traditional companies. So even more reason to get this part right!
Step #5: Holding the ICO
The actual process of creating your tokens and allowing investors to purchase them, including going through the KYC process, is now the easy part. At Tokeny we have a commercial grade solution that manages this end-to-end process for you. We also work with you on ensuring the Smart Contract is 100% correct and utilising the SICOP process mentioned earlier ensure all the other processes required to manage the issuance are in place.
We deliver an interface that is white labeled and integrated as part of your website and includes the sort of ease of use function anyone used to buying online would be comfortable with. And easy to use tools for you to manage and monitor the progress of your ICO. We utilize AWS and have rigorous process and monitoring in place to block distributed denial of service attacks or other activities that could result in the interruption of the ICO.
So while the ICO process is continuing to change dramatically, if you have a blockchain related business concept an ICO will get to the community you want and raise your project capital rapidly and with many benefits in terms of company control and ownership over any other means.