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. 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.
VC firms and angel investors are worth a shot, of course, but an ICO may be you best strategy.
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.
Because there are literally hundreds or even thousands of ICOs that launch every month, you will hear only of the good ones. A combination of PR, ICO listing websites, YouTube reviews and perhaps a TV interview or two is a good start, but not enough. A solid advisory team and some entrepreneurial background among your founders are the elements that will truly convey to investors a sense of trust that you can build a company.
Apart from that, there are no shortcuts. ICOs need to first grow a huge Telegram community (a social-chat tool that most crypto companies use to communicate) over several months, invest in a great-looking website and video and understand that there are no shortcuts.
The easy days of just putting out a white paper explaining your project’s technical aspects and the composition of your team are over. You must now establish a real use case for the token you intend to promote and the Blockchain technology that will fuel it.
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?
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 it 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.