There have been a lot of buzz about ICOs and cryptocurrencies in the recent years. You may have heard about these terms, but you may not know what an ICO actually is or what it is used for.
This article will help you know everything there is to know about ICO. Also, you can find details about how to launch a successful ICO by yourself. Let’s get started.
- What is an ICO?
- ICO vs. IPO
- How To Launch And Run a Successful ICO?
What is an ICO?
An Initial Coin Offering (ICO) is a newly introduced method of crowdfunding which businesses, especially the cryptocurrency startups, are using to raise funds for their new projects.
Also occasionally referred to as crowdsale, ICO is an event through which a cryptocurrency company releases and sells its tokens with the purpose to raise funds. The said company announces a new crypto-token and sells its future tokens to interested buyers and investors in exchange for flat currency, Bitcoins, or any other cryptocurrency.
ICO is a proven way of raising funds to initiate a crypto project, however, the success of the project depends on a number of things, including the concept, demand, technology, and the team.
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ICO vs. IPO
IPO or Initial Public Offering is a very popular yet outdated concept of fundraising for businesses.
There are many differences between the IPO and the ICO, some of which are mentioned below.
- A company’s shares purchased during an IPO give the buyer a share of ownership in that company. This is not the case with an ICO. Tokens purchased in an ICO give you limited capability in the management of the company, such as voting power, details of which are usually mentioned in supporting documents. For the most part, it is just like any other currency that you can use for trading and/or buying and selling things.
- IPO is a sale of the company’s stock and shares, but ICO is a sale of the company’s crypto tokens.
- IPOs are required to get registered for the regulatory purpose. There is no regulatory provision or requirement for holding an ICO.
- ICOs generally conclude in a short period of time while IPO sales usually run long.
- IPOs are often exclusive to privilege members such as banks, financial institutions, and selected investors. ICO sales, on the other hand, are open to all.
- IPOs are complex, costly and time-consuming. ICOs are short, cheap and easier to run.
How To Launch And Run a Successful ICO?
Launching an ICO is easy, but making it a success is not so much. Here is a step-by-step guide to launching and running an ICO successfully.
Start With The Research Part
The most obvious mistake most ICO startups make is – they do it too soon, usually without proper research.
Before you even plan to launch your cryptocurrency, you need to know everything there is to know about cryptocurrency and how this industry works. Research and read the following topics.
- What is an ICO?
- The success stories of popular ICOs
- The failure stories of ICOs and why they failed
- Features of a good cryptocurrency
- What makes a good ICO
- Concept ideas
Most importantly, search for what people in the crypto industry are looking for and what they need that doesn’t already exist.
Find Out Your Business’s Eligibility For ICO
Before you go deep, make sure to figure out whether or not your business is eligible for ICO.
Just so you know, ICO campaigns are not suitable for every business type. Here are a few things to look for.
- Whether your business provides value to users, is authentic, and provides transparency?
- Do you have an original product that can be integrated with the cryptocurrency?
- How will your product dance crypto users and investors?
These points will clear your ideas and become a base for developing your ICO whitepaper.
Find An In-Demand Concept For Your Token
Find a unique and in-demand concept and develop your coin around that concept.
If you are just planning to create a cryptocurrency with no specific concept the sole use of which would be sale and trading, you should think again. Your coin may hold a good price for some time, but the price will crash for sure as the ICO finishes.
There are too many such tokens out there which return no to very small value and investors are no longer interested in such projects.
So, it is important that your coin is based on a unique concept that is in demand. Again, you will have to research, a lot, to find out that idea. The real test of the stability and usability of your token begins only after the ICO ends and it goes live on the marketplace. If there is no demand, your coin will eventually go down.
To sum it up, start an ICO only if you think that a crypto token can add value to your product.
Define Project Team, Goals and Dimensions
As you start formulating the project concept, make sure to clearly define the following things in your ICO whitepaper and communicate the same to your target audience.
- The team – who will be working on the project
- The goals – what you desire to achieve through this project
- Investor protection – how you expect to protect investors’ money and interests
These are the most important things investors will look for when considering to invest in your ICO.
Form a Good Team
A team will be the face and the back of your ICO project. Be sure to include persons whom you know and trust. The team members should be skilled in their respective fields and must be qualified to be a part of the project.
Your investors, as well as buyers, would like to know about the team behind the project before they choose to invest. Add the details of major team members, along with their photos and contact information, on your website and in the whitepaper. It builds trust.
If your team lacks high-level professionals, you can always search for industry professionals and get them to join your project as advisors. It is one of the best things you could do for your ICO.
Create Quality ICO White Paper Communicating Project Goals Clearly
There is a reason why white papers are used by the ICOs. These documents tell your potential users everything there is to know about the project, including the goals, objective, about token and the ICO, user benefits, investor options, roadmap, technical aspect, etc.
Make sure that the goals of the project are properly defined and realistic. Users won’t like goals that are confusing or unclear. It indicates that even the team doesn’t know what they are doing or want to do.
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If you have no idea how to do that, just hire a professional ICO white paper development company.
Define The Investors’ Terms
Your investors would certainly appreciate it if you take extra measures to protect their investments, such as establishing an escrow wallet to protect the funds, offering early discounts and premiums, and creating a mechanism to return the funds if the project fails.
Other Factors To Consider
The following things can further impact the success of your ICO campaign.
- Timing – launch your ICO roughly 2-3 months after the inception of the idea
- PR and marketing – Get the word out there through the social media and the forums
- ICO agency – Hire ICO developers, website developers, white paper writers, marketers, etc.
- Do not break the law
- Do not break the user trust
Looking to create a successful ICO campaign? Get in touch with our ICO development team to know what it takes to become successful in this industry. SAG IPL is an India based IT software company providing cryptocurrency and ICO development services to clients worldwide.