Disclaimer: This is not to be taken as investment or legal advice, but rather given as a general guide to making the process of launching an ICO.
ICO (initial coin offering) is some amount of virtual coins, which are dispersed by a company to attract money: both digital and conventional. Generally, these coins are launched in the form of tokens that are symbolic digital securities, behind which value is fixed in exchange for the implementation of certain tasks that generate profit. Funds are collected for the creation of a shared capital for the realization of services through the use of blockchain technology. Thus, an ICO project is introduced to the Internet market with the proposal of some valuable services that can solve significant tasks of the society.
According to the statistics of major listing platforms for ICO projects, in the period from June 2017 to January 2018, interest in ICOs grew by 6,5 times. Simultaneously the number of such projects in the market is growing, meanwhile, investors are becoming more selective. Therefore, to entice your potential investor, you need to understand what to bet on, i.e., how to get the maximum benefits from the advantages of the blockchain foundation on which the ICO project team will work later on.
It is important to realize that ICO projects are designed to solve any problems, whether in the social sphere, the service sector, commercial, and production, solely based on the principle of the blockchain platform.
Simply put, Blockchain is a chain of data distributed among blocks, each of which is interconnected.
For example, let’s suppose that there is N number of residential real estate sellers and N number of buyers. And a company that functions according to the methodology of the blockchain has been created, the purpose of which is to connect buyer A and seller B in the shortest possible time for a minimum cost without physical intermediaries.
Let’s see a visual scheme of the interaction of interested parties through the Blockchain system.
Thus, the records on transactions in the Blockchain may look like the following (see above):
S – seller; B – buyer; T – transaction; N – a certain number of sellers, buyers, or transactions. Above is the list of transactions that took place through the virtual blockchain network of the supposed company.
Information on each transaction is recorded in a separate block. But in a way that subsequent transaction in the statistical account of this company is chained to the previous one.
At the same time, there is no central centralized data warehouse with summary indicators for all transactions. Instead, there are many different blocks with individual indicators, but they are connected with each other. This results in a decentralized database.
That is, the technical principle of work laid down in the Blockchain obliges the system to the fact that no action recorded in its cell cannot fall out from the shared database. This means that it ensures the safety of all available information about transactions. This is the main advantage of Blockchain technology.
Use the advantages of Blockchain in your ICO
It is distinctive that ICO projects are exclusive services that allow settling the market of supply and demand without intermediaries. It is when the buyer and the seller can cooperate on equal mutually beneficial terms without third parties and fear for the result of the transaction. It leads to a significant decrease in the cost of transactions. The huge, undeniable advantage is the saving an enormous amount of time to find the right supplier or partner.
Hence, the quality of the transaction is increased several times due to the existing robust database of sellers and buyers. It is not necessary for the account manager to spend lots of time on looking for an optimal solution. The blockchain platform instantly calculates only those options which fit the customers’ specific requirements.
How can the Blockchain technology quickly bring the Seller and the Buyer together, and, at the same time, ensure the security of the transaction?
It is achieved by the fact that all the pre-planned actions of the counterparty are declared in a specific computer code. The code is enclosed in a cryptocurrency block of a blockchain. Thus, the algorithm of action is programmed for each supposed step and assigned a unique cipher.
To date, we can say that there are already many projects in various areas for which smart contract codes(i.e., a set of actions) are written. Let’s take an example of a company that helps to regulate the relationship between renters and landlords in residential real estates. The experts of the ICO project Rentberry have developed smart contracts that can accurately record the authenticity of the fact that the declared landlord who put up his dwelling in a long-term lease is the real owner of the housing and intends to rent it for a long time.
It should be noted that the creation of such smart contracts requires careful study from a large group of professionals such as lawyers, account managers, marketers, and definitely, technical developers and programmers.
Issuing tokens and smart contracts
Before launching your ICO project, you may consider the possibility of creating your separate platform where you will release your own tokens tied to your individual smart contracts. However, you should take into account that this is a highly costly procedure, and such platform can be realized if the project covers a broad audience and solves global problems. In general, for these purposes, there should be a very ambitious and realistic project.
Meanwhile, if your project is more limited in value and completely realistic, then the optimal decision will be to use a ready blockchain platform that produces tokens and provides smart contracts.
The most popular platform of this kind is Ethereum. About 70% of companies use it, and most digital currencies exchanges support its tokens. Here you can open the wallet application (free for download), create your smart contract, and also, set all the necessary parameters for the publication of your token on the market.
Another resource called Waves which is chosen by about 6% of companies with ICO startups can be noted. The advantage of this platform is the processing speed and user-friendly interface. However, it does not support the ERC-20 standard for issuing tokens, and, therefore, not all stock markets accept these tokens.
There are also platforms like New Blockchain, NXT, BTC, and BTS
each of which occupies just over 1% of the market and the rest of the players have even less share of the market.
So, reputable ICO projects that precisely know what problem they can solve with their smart digital platform need to attract a significant amount of funds.
How much does it take to launch ICO?
In order to assess the necessary total amount of funds for starting the implementation of the project, it is essential to determine the scope of the committed project.
To do this, you need to:
- precisely set the primary task which the company is aimed to solve by implementing the blockchain;
- define the range of the potential audience.
Subsequently, based on these factors, a whitepaper will be created, which will describe the number and type of specialists involved in the project, and most importantly, what future tasks are set for realization.
Considering that, up to this date, there have been many cases of scam projects, it is highly recommended to specify the exact amount of money that a startup needs. Thus, when you are open, honest, and can justify in detail on what items of expenditure the collected money is planned to be spent, it always gives a significant advantage to the project for attracting investments.
Critical steps in the launch of an ICO project
So, first of all, you formulated the idea of the project and identified the cornerstone tasks. At this stage, you can get together with a small circle of people whom you trust and brainstorm on the relevance of the proposed business idea. After that, when you are convinced that your future company is indeed able to solve significant problems of society using the blockchain, you should proceed to the next stage.
Building a team
Everyone knows that technical developers and programmers are must-have for the team. Meanwhile, it is essential to attract various specialists to efficiently solve tasks of different levels of complexity assigned to the project. Hence, the team should include designers, content managers, PR specialists, SMM and community managers, and marketers. As the project enters the market, consultations of competent lawyers and ICO experts will become necessary.
It is very important to include specialists who are not only experienced but also be burning with the project’s idea. If you are determined to find like-minded people for the main pool of your team, then the probability of success of your project is very high.
Important! You should choose advisors and experts for your project very carefully. There is no need to be stingy, and it is better to spend the necessary budget to attract well-established professionals in this field and media persons who will imbibe your idea and be able to present it to the public in the best possible way.
It is the salary fund that takes the most significant share in the expenditure, especially at the initial stage of the company’s establishment. Therefore, it is necessary to think over the means of payment. It may be:
- personal or borrowed funds;
- a partial salary and a proposal for a significant bonus at the start of the project;
- an offer of a certain percentage from closed pre-sale of tokens.
It is necessary to analyze successful and unsuccessful projects that entered the market with similar services to yours. It is desirable to conduct a SWOT analysis and utilize this tool in the future.
Examples of ICO projects, which should be noted:
Tezos, one of the most successful products in the field, raised $137 million in 5 days. The company positions itself as a “digital commonwealth”, offering a new prototype of protocol for smart contracts. Unlike Ethereum, the founders of this company use the principle of updating the protocol without a hard fork.
BANCOR ($ 140 million) performs the exchange of ERC20 tokens (based on Ethereum) directly, without cryptocurrency exchange markets. It increases liquidity in the market of ether tokens and frees from commission fees.
Bluzelle ($ 250 million) promotes the solutions of a decentralized database on the blockchain network, to which any PC owner can connect. Customers of this service will pay for the placement of information and data in the system of the project.
It should be noted that currently on the ICO market, there are more projects which offer various technical products. Apparently, they are useful for the formation and building up of the structure of the crypto market. So, at the moment, we can witness the construction of the infrastructure of the cryptocurrency market is proceeding at a high pace.
However, projects with social significance implemented in the system of the blockchain also exist in the market. For instance, there are projects related to selling or renting a real estate, choosing online stores, “taxi” services through a special application, charging station services for electric cars, investing in sports clubs or arts and creativity.
It is necessary to register the company as a legal entity in the territory of those states where the legislation on regulation of the cryptocurrency market operates, such as United States, United Kingdom, Italy, Spain, Germany, France, Australia, Canada, Japan, South Korea, Sweden, Switzerland, Cyprus.
It is the primary document, which contains the full business plan and description of the ICO project.
The description of the project is the most read part of a whitepaper.
In the description of Whitepaper, the following points need to be explained to investors:
- The origin of the idea of the project; The problem that exists in the market;
- Target audience: who needs the advertised services and why;
- How you intend to solve the problem, i.e., the method of the technical solution, the review of the product. In this informational section, it is desirable to illustrate and schematically demonstrate the principles of operation;
- How you intend to interact with your investors and users of your services, i.e., present content, PR, community plans and provide a list of all resources (social channels, professional communities, forums) on which you plan to participate. It must always be borne in mind that there are different kinds of visitors, so it is desirable to conduct around-the-clock moderation of social channels;
- Who is in the pool of your team: you need to post information about all your experts (their track record and links to their projects);
- People with whom you cooperate: it is necessary to communicate and give exhaustive information about all involved experts, auditors, advisors, lawyers, experienced and well-known technical specialists and programmers. It is one of the most important points that investors pay attention to, immediately after getting acquainted with the mission of the project.
Description of the project’s business activity:
- It is necessary to indicate the final amount of capital that you need to collect through investments. This statement, of course, needs to be accompanied by explanations about the planned allocation of funds: why and where it is intended to be spent at a certain stage of the project development.
- Specify the approximate start and end dates of the ICO project;
- Considering the nature of the “product life-cycle”, estimate the expected income generation at the stage of product’s introduction into the market, early development, maturity, and recession. And, accordingly, to develop a roadmap for the project, where you need to specify the expected results that you plan to achieve in each quarter of the year.
- Provide working demos and cases of the service;
- Most importantly, you should write down investment conditions and income distribution conditions for each group of investors: for participants of the project’s bounty program; for the investors of the pre-sale period of ICO’s release to the market; for those who invested, when the project started and publicly announced it. It is necessary to show with which cryptocurrencies you will operate and which exchange markets support it;
- You also need to tell investors what you will do in case you do not collect the necessary amount to start the project.
Marketing and the technical side of the project
Before you start synchronous PR-campaign, e-mail newsletters, and communication with people on all sorts of social channels, professional blogs, and forums, you need to build a suitable website that is the face of the project. It should include all documents and contacts demonstrating your openness, professionalism, and proof that you are working in the legal domain.
An outstanding website is the key to success
The website should present all the initial information about the project which is given in the whitepaper in a clear and obvious form.
The content of the website need to include:
- The mission of the project. The target audience. A technical solution with the help of a developed “product”;
- The team and its leading experts: a description of the experience and the merits of the specialists, providing all working contacts;
- Demo version and cases: show how the “product” works;
- Project roadmap: indicate the profit that you expect to receive for a specific time-period in accordance with the life cycle of the “product”;
- Information for investors. In this section, you need to describe your responsibilities and obligations to investors and vice versa:
- terms of investments for participants of bounty programs which help to promote the project in social networks;
- terms of investment in the pre-sale period;
- terms of investment at the start of the ICO;
- Marketing campaign: to place a content plan, a community plan for access to various channels in accordance with the schedule;
- Legal requisites and documentation (licenses, approved development plan, whitepaper)
- All the blocks of the site should convey the principal idea of the project: to be understandable, clear and coherent.
Most importantly, an investor should deposit his money into your account. Therefore, he should not get lost in the endless “information tunnels”. It is vital that he sees a call-to-action that will show where to place investments. Going through the link, the Client should reach a striking landing page which will prompt him to make a purchase. It is the final point where he moves from accumulated knowledge to action, and he should like the webpage no less than the project itself.
- Post the videos. They can also demonstrate your “product” or your experts. They can be interviews or special coverages about the work process of the team during the development of the ICO.
- Finally, open a personal account page for the Investor. And provide him with detailed instruction on its navigation. Provide a guide for the use of personal wallet: here you need to notify investors about the placement of tokens, how and where to buy tokens or accept cryptocurrency. Provide a schedule on entering the exchange market.
You need to add a form to subscribe to news, courses and other notifications related to the activity of the project.
Now, when you have pinned down the necessary elements of the website, you should decide the best way to get it up and running. If you’re lucky and you have skilled web developers in your team, this shouldn’t be too much of a problem. Otherwise, there are two options in general. First, you can hire web developers. The second choice is to buy ready solutions for an ICO website. Each option has its advantages and drawbacks.
To build a website from scratch, you have to be willing to spend at least several thousand dollars. You can find web developers in your local area or through freelance platforms. It is critical that you know exactly how your website should look like and function. You should negotiate the results and deadline with developers. Otherwise, the process may take a very long time.
With the rise of blockchain industry’s popularity, many website templates and solutions specifically tailored to the industry have emerged in the digital market. In case you want to launch your website faster and at a lower cost, ICO website templates are the best alternative. Mostly, these kinds of templates can be found on ThemeForest, largest digital market for website templates from Envato. For instance, Crypterio is a WordPress theme that supports all the abovementioned necessary features and plugins for launching an ICO. It even has a new Whitelist Pre-Signup feature that is not supported by other solutions in the market yet. Whitelisting can help you to increase the trust in your product and significantly protect you from scammers and frauds. The theme is quite flexible, which makes the process of customizing the layout and design fit to your needs much easier. You only need to plug your smart contract to the theme, and all the data will be synchronized with visual representations of the landing page.
Important! Keep in mind that if your project is indeed appealing to the community, your site can simultaneously be visited by thousands of people. It means there can be a danger of being attacked by aggressive spam and phishing links. You need to think about this in advance and take precautions. If you’re aiming for the global market, you should translate the website and other informational sources into major foreign languages such as French, German, Russian, Korean, Japanese, and Chinese.
Publish the project on ICO trackers
ICO trackers are specialized resources where you can get acquainted with the listing of upcoming and ongoing ICO projects and participate in thematic forums. So, you will be able to evaluate projects and choose the most appealing. Some websites take on the role of experts and initially evaluate the ICO, and then decide whether or not it be on their platform.
The following trackers are noteworthy:
Main audience: USA-23%; UK- 10%; Russia- 7,5%; Germany- 6%
Main audience: USA-28%; UK- 6%; Germany-5%
Main audience: Russia- 12%; USA-11%; Japan- 10%; Germany-5%
Main audience: USA-26%; Japan- 14%; China-7%
Main audience: USA-32%; UK- 7,7%; Russia-4,5%; Thailand- 3%
Main audience: USA-18%; Russia-10%; UK- 8%; China- 6%
Main audience: USA-20%; Russia- 14%; UK- 7,5%
Main audience: USA-28%; Russia- 6%; UK- 6%
Thus, when choosing the platforms to place your project, you need to take into account visitor statistics and audience segmentation.
Keep in mind! When the ICO project is launched, it is necessary to monitor the operation of the website and additional resources where it is published around the clock since there are many cases of hacking at the fundraising stage.
If your project is really relevant, then it’s easy for you to remain honest, which means that you should be able to provide exhaustive information about your project. And you need to be as open as possible to communicate with your investors, to respond to their questions swiftly.