HOW TO LAUNCH AN ICO TO FUND YOUR STARTUP .pdf
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HOW TO LAUNCH AN ICO TO FUND YOUR STARTUP
Initial Coin Offerings or ICO achieved exponential growth in last 2 years. Keep aside the entire
venture capital funding; ICOs have emerged as the best and easiest option for fund raising. As per
the reports, startups raised more than $5.6 billion through ICO launch in the year 2017. According
to CrunchBase, the number of ICOS raised in 2017 and first two months of 2018 is smaller
compared to venture capital rounds announced by Blockchain and the Blockchain related
companies. However, despite being smaller in number, the funding events initiated by ICO the
launch on average attract much more capital compared to average venture capital funding rounds.
During the last 14 months, Blockchain and related companies were successful in raising about $1.3
billion through worldwide venture capital rounds. Nevertheless, ICOs were aggressive raising
nearly $4.5 billion during the same period.
In 2015, ICO had a smaller market share. It was harder for a startup to raise million dollars through
ICO. Only a few ICOs launched could hardly raise a million dollars and more. Nonetheless, ICO
experienced golden days in the year 2016 when DAO raised $150 million in just a few days from
its launch. However, the same project was plagued with security issues, later SEC found out, it was
violating the security laws too. But, the speed at which DAO raised funds created a history and
marked the start of an ICO launching era. Evidently, Blockchain based ICO products displayed
ease, simplicity, security, and potential to divert the attention of major businesses towards ICO
launching projects as a sales or funding model.
How Does ICO Work?
Before diving deep to understand how ICO works, it is necessary for startups to understand what
ICO is – ICO is an online cryptocurrency version of the crowdfunding. The ICO campaign is
launched for a certain interval and investors may purchase tokens exchanging for available
cryptocurrency only within the specified interval. Each token is prefixed with a specific price;
guaranteeing a surge in the initial price of the token after the proposed project goes live and earns a
reputation. ICO follows a typical cryptocurrency environment, allowing investors to trade or sell
these tokens, which reflects how the company performs to contribute great fluctuations in the
value. The funds thus collected through ICO launch are then utilized with some features to launch,
manage and grow the proposed project.
Now let’s consider how does ICO works,
There are four major steps in ICO, explaining each one of them will help you understand
how ICO works :
This is the first phase and is an early announcement about the project and procedure made to ignite
the interest of investors. During this phase, ICO launchers give presentations along with an
executive summary of the project to explain its purpose and objective. With every presentation,
ICO launchers get reviews from investors. Analyzing the review, which might be positive or
negative helps in the Launcher to iterate the presentation and scope of the project ensuring it meets
expectations. A repetitive process lasting for about a month, resulting in a project presentation
satisfying everyone involved. Only then, the investor’s start showing interest and start investing in
The offering represents the second phase of ICO launch, which is a declaration about the
transactions that will occur during and after the ICO launch. It covers everything from partners,
token generation, token expenses, fund allocation, targeted amount and the expected outcome of
the project. A detailed information about the tokens and its sale, trade, use, price and other things
are covered in the offerings. The business proposal also involves all the related rights owned by a
token of particular value, accountability of the investor in the form of dividends as well as start and
end date for ICO token sale.
PR or digital marketing campaigns play a major role in ICO launching as it markets, attracts,
and forecasts the present and future of the ICO project. A thoughtful and informative PR campaign
that lasts for approximately a month helps ICO launching companies and persons to reach small
and big investors and customers from every category. During PR campaigns, the primary focus has
to be angel investors as they are more interested to associate themselves with some promising
business ideas. At the end of PR campaigns, it is the time to start the buying and selling process of
ICO tokens. The moment ICO is launched, investors or customers can be a part of your project by
Sale of tokens after completing all the processes is the final stage of fundraising. However, there
are two approaches using which an ICO project furnishes successful ICO sale. The first way is
to launch ICO sale after securing a bare minimum amount that has been defined in the proposal
and then, dividing the sale of token amongst various investors in a specific ratio. The second way is
to sale ICO token at the time of cryptocurrency exchanges – for this process to take place, ICO
launchers have to pre-release the tokens so that exchanges can take place based on many other
cryptocurrency exchanges. The second method is similar to the traditional IPO process.
What’s in it for Startups?
A Better Approach to Reach Goals :
The traditional way to raise funds is about pitching business ideas, giving presentations, and
compromising with investors. Although many startups believe and practice it to raise funds, ICO
definitely has emerged as an option to this traditional crowdfunding method. Startups must
consider the ICO launch as a unique opportunity to witness their project developed and
established. It does not matter to which domain your project belongs; remember a killer business
idea always has the potential to become next Uber or Airbnb. However, this blog does not assure
anyone that ICO is better than venture capital, but focuses on urging startups to try ICO as it gives
better control over the funding process and startups can access contributing creative minds
interested in growing businesses.
Easy Entry in the ICO Environment :
Tokens are at the heart of an ICO project. It is due to the Bitcoin success and the innovation we
achieved in cryptocurrency or digital currency, we could generate tokens and lunch an ICO.
Startups have the liberty to create tokens either by using the existing code or by writing a new
code. Remember, the number of tokens you want depends on the aim or scope of your project. If
you prefer Ethereum platform to develop your ICO, then you have the leverage to access
“Template Token” called ERC20 offered by the Ethereum platform. It reduces the efforts, making
it trivial to define the token. There is no need to write a code for launching ERC20 token. Paying a
small fee for every transaction ensures token runs well on the Ethereum Blockchain.
Limited Regulations :
Until recently, there were almost no regulations over the ICO market. Apparently, ICO was looked
after as a fair field of money laundering and Ponzi schemes. The perception of the legal uncertainty
in the ICO was due to fear of losing everything or fear of missing out. But, since last two years or
so regulating ICO environment gained momentum, countries and their regulating authorities are
embracing and welcoming ICO and cryptocurrency environment. Additionally, the building blocks
of the Blockchain – Transparency, and Authenticity helped ICO re-establishing trust of investors. It
is mandatory for every startup to have a strong legal support backing ICOs the time of its launch.
Cryptocurrency has been an amazing source of innovation on both fronts – technical and business.
As ICO environment is still in its adolescent stage, many are taking advantage of this young
platform to get rich faster, which is not right. With time, startups will start to get clarity about
terms of regulations, investors will get clarity about what they are buying, and entrepreneurs will
get clarity to adjust their ICO models to accommodate realistic funding sequence.
Undoubtedly, ICOs represent a very innovative way of raising capital. With ICO, you get access to
a larger audience with fewer risks, no dilution risks and an easy way out, unlike Banks or VC’s. In
addition, the fluidity of investment that allows investors to spend or trade tokens, the opportunity
to speculate the tokens once they are listed along with the transparency and authenticity it provides
makes it an attractive investment option for investors and a medium of crowdfunding for startups.
Having worked with many ICO startups right from scratch to ICO sale, our clients call us the
pioneers in ICO Launching services. We will not only ideate your ICO product but will also help
you to launch and market it. Contact us if you need any assistance to launch your ICO.
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