Some Questions to ask before you plan an ICO Launch
Where IPO stands for Initial Public Offering, ICO is Initial Coin Offering. With little difference in names, the purpose of both is same. Nowadays, there is an ICO happening almost every other day. Whether it’s a blockchain for VR and AR or a blockchain for gaming economy. Cryptocurrency is making its mark in almost every leading industry.
ICO, an event, which is also referred as a Crowdsale, occurs when a company or a startup releases its own cryptocurrency for the purpose of funding. The participating company releases its own token money or crypto-tokens and sells it against bitcoins or fiat money. As an outcome, the company which is hosting an IPO gets the capital and the audience participating in it, get their shares in a form of cryptocurrency.
Is ICO suitable for any business?
Not really. Many companies think that ICO is a tool for every project and it will quickly raise them funds bypassing the long process of an IPO that costs them hefty money and efforts. In fact, ICOs can prove to be detrimental to some startups and companies in a way that they will spend time and money on a campaign which won’t secure them any funds.
So before deciding on how to conduct an ICO launch, one ought to reflect and consider if they even should conduct it at all. Here are a few questions that you should ask even before you start planning for your ICO campaign.
Can digital token be integrated into your business?
We all know that ICOs are a trend which every other company is trying to follow but regardless of all the other factors which may affect your business image, there is one basic question that every company or startup should ask before deciding to even go for an ICO campaign. The question is “Whether this digital token can be integrated into our business model”?
There may be many hindrances, like for every token and its implementation, there is a prerequisite set of requirements that need to be followed and if you do not understand those, going for an ICO is not a wise choice anyway. For example, the value of Ethers, the tokens which were released in ICO of Ethereum are secured by this pre-set rule that they need to run DAps in the network.
Do you have Token Economics ready?
What is your token about? Have you written a Whitepaper for that? What is the supply/demand and how are you distributing it? These and so many other questions define your Token Economics. If you do not have them ready, hosting an ICO would be of no use. It is the basic step on the ladder to launch a successful ICO campaign.
One way to have token economics ready is to do it yourself if you have an expert who can take up the responsibility. Another way is to take help of companies that can plan and execute your ICO campaign successfully by getting token economics done for you.
Have you prepared the investor’s terms?
This is another aspect to understand. The investor terms will draft a clear and transparent outline for everyone investing in it. Define early bird discounts for investors that are contributing in a first few days of the campaign launch.
Use Escrow Wallets. To protect the amount and show transparency, you have to collect and show all collection in an escrow wallet with names of all key holders. For safe side, make a process that guarantees the return of the funds to their contributors. It is always possible that that campaign will fail to reach the targets and you will be forced to roll the campaign back.
Are you ready for a possible value crash?
After every ICO, there is a huge possibility that your coin’s value will crash. We all know that the only use of your coin is buying/selling in an exchange and soon after the end of ICO, the value may go down unprecedentedly. So if you are not ready to lose your expectations of exponential profits, you may be disappointed.
For example, Aragon, GNT, and many other well-funded ICOs have crashed the moment they became available to trade on the exchange. Why is this? Does it mean that entering into an ICO is a bad strategic decision anyway? No. After ICO, the coins stay at above ICO price but demand is not as high as it was pre-ICO. Supply gets low and when the coin hits the exchange, the hype gets stabilized.
Above all, Is your PR team ready?
Often ignored, but of most importance. PR or Marketing of your campaign is as necessary as organizing it. Getting enough eye-balls that convert is one of the hardest parts and as the trend is emerging, there is an ICO launch almost every day. Take help of influencers, bring people on board to take feedback and tweak your communication strategy to make it look professionals. Consider the option of bringing a professional company onboard that is specialized in PR domain and can help you create a buzz. There’s nothing worse than having a well-prepared ICO campaign fail miserably due to the lack of marketing and outreach.
DISCLAIMER: Opinions expressed by Coinschedule Blog contributors are their own.