by Last Updated on July 23, 2018 by Sohail Qaisar
When we look back ten years from now, the year 2017 will be a landmark year for Initial Coin Offering (ICO). According to ICOData.io, 873 ICOs were launched in 2017 and raised over $6.1 billion as fresh capital for various software startups. Since then, ICOs have tremendously grown to become one of the top options for raising funds for startups.
But while we commonly hear about numerous successful ICOs, analysts from IBC ICO Agency have noted a high failure rate in cryptocurrency launches. In fact, in 2017, only 435 ICOs out of the 873 succeeded — that puts the success ratio at a little less than 50% and that doesn’t sound too exciting, does it?
The truth is that launching a successful ICO is no easy task. Add to the tedious process, you still have to compete with numerous ICOs being launched almost everyday.
To avoid the common pitfalls of unsuccessful ICOs, we’ve put together this quick guide to help you through your ICO journey.
Successfully launching an ICO
The conceptualization stage of an ICO focuses on building a fundamental purpose of the project. It is essential that your concept of the project or idea solves a problem. This may take many days, weeks and even months of brainstorming and careful study. Successful ICOs offer valuable and noble solutions to the most pressing problems of users, organizations and mankind. You should take your time discerning on the vision of your project.
Once you’ve identified the problem and its solution, you need to assemble your core team members. Your team will come up with a product plan that outlines the product functionality, technology to be used, ICO characteristics, token, etc. Your goal is to build a team whom the community will trust. As such, your team members should demonstrate knowledge of the blockchain technology, business development capacity, and technical expertise. Aside from your team, you also need to get advisors who can provide sound advice and mentorship with the goal of perfecting the project and the ICO details. The advisory board can provide technical knowledge or industry knowledge.
After the conceptualization stage, you can then start introducing the project and creating a buzz about your solution. Here you need an effective communication plan to spread your vision for the project. Writing a white paper is a crucial step to introduce your project to potential investors. A carefully authored white paper should present comprehensive information about your project, which includes the problem, solution, technology, product, token, ICO process, business, team, etc. In this stage, you will need to present to investors a roadmap about how you plan the ICO to proceed, the commitments for development, and the important dates. By setting milestones, potential investors, supporters and the community can have a clear picture of what to expect after the official ICO.
You don’t want to get into trouble with legal problems in the future. As such, you need to seek legal counsel that will help you comply with all the necessary legal regulations, such as jurisdiction, taxes, securities, corporate structure, and more. Having a sound legal advice is crucial for the success of an ICO.
After the long and arduous preparation stages comes the actual token sale. You need an effective communication and marketing campaign to inform the public about the token sale, its specifics, sale terms, distribution, selling dates, etc. Your goal is to attract potential investors to buy your tokens. Get the services of a specific ICO auditing firm to have your smart contracts code audited.
Depending on your roadmap, you can run a pre-sale to collect initial funds for development. However, some ICOs go directly to running the actual crowdsale. The funds raised will then be liquidated to secure cash and pay to assemble the team, business and technology. Once set up, you would need to present a working prototype – the sooner the trial product is released, the better. In some cases, the startup releases a prototype even before the ICO.
A successful ICO doesn’t stop with getting the funds. In fact, completion of the ICO only signals the start of the next (and more important) phase of the project, which is realizing your solution. It is during this stage where the real work and responsibility of fulfilling your commitments to the community starts. Being open, showing progress and keeping your community up-to-date is very important.
Conclusion
With the numerous ICOs being launched every day, you want your ICO to stand out of the pack. Successful ICOs require solid fundamentals in place that include: a team, a feasible plan, a white paper, a working trial product, etc. These requisites are what makes your project trustworthy to the community, so they need to be developed as early as possible.
Finally, the blockchain and cryptocurrency sector can be quite chaotic and noisy. Some may find these distractions unnerving and unsettling. But don’t get distracted by all this noise. Focus on your project to ensure a successful ICO!
