ICO’s are storming the world of cryptocurrency, every week there is a new Initial Coin Offering that gives investors the opportunity to become involved in the crypto world. But what if you are startup who wants to create an ICO? Don’t worry here at Crowdholding, we have created a step by step guide on how to create your own ICO so you can also immerse yourself in the growing eco-system of cryptocurrencies.
This step by step guide will break down all the parts that are needed for a initial coin offering. This first part will focus on the very beginning, the actual theory behind ICO’s and whether your startup is suitable for an initial coin offering.
What is an ICO?
ICO’s have been in the spotlight this year due to the amount of capital they are raising, as recently as last month Filecoin raised over $250 million and the other top 3 have raised over $150 million each.
An ICO is a fundraising mechanism, where your future cryptocurrency is sold for current cryptocurrencies, such as Bitcoin and Ethereum. If you want more information about ICO’s and what they are you can look at our article called “What is an ICO?”
Theory behind the token
Once you know what an ICO is, you need to know if this is applicable to your startup. Some CEO’s seem to think that launching an ICO is a tool for any project, that allows the startups to raise money and to bypass the long, tiresome and costly process of registering for an IPO. This is no longer the case, as standards are starting to quickly appear. There are now informal standards / requirements in having a successful campaign.
To make your token popular with investors during your ICO, you need to have the token fully integrated into the core structure of the startup. Investors should be able to plainly see how the token will gain value as you startup starts to flourish. If you need to research about the potential that blockchain technology can offer to you startup, you can read our blockchain article here.
Because of this you should be able to answer these questions that a potential investor could ask you about your token:-
- Why do you need blockchain tokens in your startup?
- What is the goal of your startup?
- What advantages does blockchain technology give your project?
- What is the link the blockchain technology and your product?
- Why is your token of interest to potential investors?
- What laws does it bend / break? Data protection etc.
- What benefits / drawbacks are there on going on a crypto-exchange?
- Do you have competitors? Are they other ICO’s?
Secondly you need authenticity and transparency. The cryptocurrency community is booming and there are a lot of ICO’s. One vital factor is to show that you are legitimate and not creating a ICO for the sole purpose of becoming wealthy at the expense of the investors. Your token should contribute / solve an issue and have clear goals that benefit everyone involved.
Lastly you need to think if you have the capable team to pull of an ICO. One of the main deciding factors for investors is the team behind the project. If the team lacks experience, capabilities or are untrustworthy investors are unlikely to put money down on your project.
You will need a pretty large team to pull off an ICO. You will need content specialists, editors, PR, SMM, community managers, designers, UX / UI and programmers to get the ICO off the ground. Another consideration is languages. ICO’s are a global phenomenon so having multiple languages in your team will also be a huge advantage.
So when deciding on launching an ICO, you will have to take into consideration payment for these staff members. We suggest starting to create your ICO 3 month prior to the launch of your pre-ICO which means you will need at least a 6 month runway.
Once you have figured out how to implement a token / blockchain system into your startup, your goals and if you have a capable team you can move onto the the next stage. The second part of our guide will show you how to create a wallet and how to start to package your product with a white paper and a website.