Startups are always on the lookout for good opportunities. For many, this means raising money through an initial coin offering (ICO), as opposed to the more traditional venture capital route. In the simplest terms, an ICO is a fund-raising means in which a company releases its own digital currency in exchange. The point is to attract investors looking for the next big cryptocurrency score.
With this trend picking up steam, your startup might be wise to investigate whether an ICO would be right for you.
Some considerations are in order One is that individual investors are growing tired of initial public offerings (IPOs). Sure, there’s plenty of opportunity to make money that way, but it’s nothing like the excitement surrounding an ICO.
With hundreds of millions of dollars spent on ICOs over the past few months, there is no slowdown in sight. In fact, because more startups are considering the benefits of an ICO, don’t be surprised if 2018 is even bigger in this area than 2017 was (and that’s saying a lot).
Here is what your startup needs to know about ICOs.
1. They represent a different approach (so get in the right frame of mind).
In the past, raising funds was all about pitching your idea to venture capitalists. This opportunity still exists, but it’s no longer the only game in town.
As a different approach, wrap your head around the idea that an ICO could be the best way to obtain the cash you need to realize your goals. Maybe you’re the founder of a technology startup that develops super-cool iPhone apps. Once you realize that you need to raise funds, to hire new talent or kick-start your marketing efforts, you’ll realize that it’s time to consider your options.
2. Competition is fierce.
Remember: There’s more to success with an ICO than meets the eye. You can’t assume that investors will flock to your ICO. Instead, your success (or failure) is directly tied to your marketing.
Still, some ICOs have been quite successful: The total amount of money raised via ICOs each month, according to a CNBC.com special report, is in excess of $100 million. This means two things: Individuals are willing to invest, and investors have options.
While this surge means that ICOs are receiving more media attention, it also means that competition for investor support will only increase. Companies that want to distinguish themselves among the saturated ICO playing field have to educate themselves on best practices and execute at a level that is as mature as that of companies vying for IPOs.
3. Communication is key.
No two companies or investors are the same, and an ICO is no exception. This is what makes effective communication just as important as your marketing strategy.
The way you communicate with investors is essential to your success. Have you outlined the details of your ICO, such as the technical information that investors are sure to mull over before making a final decision? How about your vision for the future, including where you see your company moving to in the next year?
“We communicate with hundreds of ICOs that want to list themselves on our website and community,” Alex Buelau CEO of CoinSchedule told me. “Based on what we see, teams that have a very clear and well-defined road map and a not-too-heavy marketing white paper do well. It’s also extremely important to have an attractive one pager [description] and website, because people buy with their eyes.”
A clear marketing message puts you in a good light with investors. They want to see a clearly defined company strategy, and possibly a serious lock-up on token bonus for the founders, to create ithe sense that the company is in it for the long haul. Alternately, a cloudy message can lead to your business (and ICO) being overlooked, in favor of the (heavy) competition.
How to Launch your own ICO today and receive investments?