Your ICO’s vitals, are they there?
Back in 2016, and for the better half of 2017, all you really had to do to raise capital for an ICO, was showcase a new disruptive idea. With the success of major cryptocurrencies, newcomers were eager to throw their hard earned cash at nice sounding concepts, seeking hefty profits. As we now know, most ICO’s turned out to be either outright scams, or simply incapable of delivering on their promises.
Luckily, for us in 2018, those times have passed. The market is no longer so gullible, investors are becoming much more educated. Their decisions are weighted and backed by multiple reviews of every project conducting a token sale.
Let us now, for the sake of those unfamiliar with the market, go over some of the integral parts of running an ICO in 2018. What must a project do to be successful?
As we progressed through the year, having a Minimum Viable Product (MVP) was essential for a project to not be deemed a scam. Today, however, I would stress the importance of having an actual product that works and generates some traction in the community. You don’t necessarily need a profitable business (although that would help) but you need to have the ability to demonstrate that there are actual users for whatever you’re working on — a good product-market fit. There are exceptions, but let’s stick to the most probable criteria.
Public sales and micro investments are becoming less and less popular, and institutional investors, along with funds, are stepping forward. Private wealth managers are also turning their attention to blockchain investments. Although they generally see these investments as very high risk (which they are), their clients are requesting action, propelling them to act.
Such organizations demand high accountability from projects, so we can, for the near future, expect crypto projects to change for better in terms of performance, efficiency and credibility. But, at the moment, we deal with ambivalent market conditions: there are still many scams and frivolous projects, but investors have already learned their lessons and became much pickier.
So, how can you bring the investors’ attention to your ICO?
Product
As I’ve already mentioned, it’s now paramount to have at least a working prototype of your idea. You don’t have to sugar coat it and make it look pretty, but your product should preferably have a justified use for blockchain technology and, at least some of, it’s code should be publicly available. These things make you look trustworthy and capable of delivering on your promises.
I would also strongly advise implementing a credible value proposition for your business model. Take the best practices of leading global startups from the last couple years. You MUST be profitable. If you can prove you are, not just on paper, but by actually showing your product’s demand — that people are willing to spend their money, tokens and time on it, you’re much more likely to succeed.
Documentation
There has been some debate over the past year or so, as to what supporting documents should be available to your audience. I would say the number one document you should have is a short paper, a quick 1–3 page overview of your idea. You may use it to pitch potential buyers and that’s what’s going to be read the most. So make sure it’s the first thing you publish. Second, comes your White Paper. You may decide to make it a combination of a marketing, business and technical overview of your project, but I suggest splitting those up.
Let your White Paper be a combination of a business/marketing plan. Omit the technical details for a separate document “Technical Paper” and save all the financial details for a “Financial Paper”. This will provide you with a) solid information about the project for different audiences and b) will reduce your legal exposure. Describe the nature of your project, fill your audience in on the backstory of the project, and provide background information on the people working with you. Show how your project will change the industry you’re tackling. Tell a story.
Get your development team to write a Technical Paper. The “authentic” crypto-community is very technically savvy. You must appeal to them. They have the power to either embrace your idea and qualify it as viable, point out it’s flaws, or discharge it as another scam. There will be little you can do to change their mind once it’s made up.
Be sure to include your calculations, extracts from code, and if possible, links to your GitHub, or other repository, which will demonstrate the progress you’re making in terms of development.
Lastly, and this is debatable, but in my humble opinion necessary, your Financial Paper. A document aimed at traditional investors i.e. Hedge Funds, VC’s, Family offices, etc. Break down your business model from a financial standpoint. Include your tokenomics, profitability predictions, a balance sheet, cash flow statement and a P&L statement.
Note: some of these documents may be made available on demand and under NDAs.
Legal
This is an important one, partially because it was overlooked by most ICO’s that came out prior to Q3 of 2017. FIND GOOD LEGAL REPRESENTATION. I can’t stress this enough. Another point to mention, a big name is not always a panacea. There are many lawyers that simply won’t let you work. Look for ones willing to help you minimize your risks AND get your project rolling.
KYC and AML procedures are a must, and they do affect your conversion rates. However there are both legal advisors, and developers/designers, who know how to minimise losses. Lastly, get as much coverage as you can, it’s not enough to simply draw up a Privacy Policy, Terms and Conditions and a Terms of Token Sale, and register in a favourable jurisdiction. You will be interacting with investors. Have the necessary documents that will help them make a swift decision to back you and have your documentation and website audited. Your goal every step of the way should be to minimize risk for both yourself and your business.
Team
One more vital element of running a successful ICO, and business, is the people working alongside you. Your team should demonstrate experience and knowledge in either the industry you’re disrupting, blockchain technology, or both. Don’t forget, this is still a very niche market, and any additional knowledge you can show will be valuable. As with traditional startups, you may find yourself incapable of maintaining a 10–20 person team full time. Choose those who will represent the company wisely. Their faces, profiles, and at times, lives, may fall under public scrutiny. There are 3 key figures your team must consist of, a CEO to represent your company, a CTO to help with the development of the end solution and a CMO to help create a good image and an interesting story around your project.
I’m a big fan of outsourcing. Outsource everything that doesn’t fall under your company’s core expertise. You don’t have to be phenomenal at marketing if you’re creating a product for Med Tech. Much like, you don’t need to be exceptional at development when building a solution for gambling. There will come a time to build up your team. That time is not necessarily now.
TOP TIP! Use advisors. Last year, advisors were public figures that would quietly sit on your landing page and that was enough to bring credibility to your project. Today, everyone knows those advisors are easily bought and no longer bring that extra value to your project. Instead of looking for people with a following, look for those with core knowledge in the areas you’re lacking. Find a financial advisor to help with your tokenomics. Get an expert in your line of work form a different region to be able to appeal to different geographies. Advisors can bring a lot of value to your project. Be smart when deciding who to share your success with.
Marketing
Last, but not least in my list, is marketing. This is where things get tricky. About two years ago, your marketing would consist of two threads — one on Bitcointalk and another on Reddit, paste a link to your whitepaper and you’re done. Answer questions in a timely manner and you’re golden.
Then came the “era of the hype”. You could throw anything in the direction of the community and funds would start flying in. Slowly but steadily, competition amongst ICOs grew and so did the prices. Roughly a year ago, you could expect 10x returns from your marketing budgets. Today, however, as I’ve mentioned before, the investors profile has changed and competition has become even greater. It’s now estimated that your marketing will deliver 6x returns and you will have to work your ass off to make this statement true.
Get help! If you’re not equipped with a full on, in-house, marketing department, you won’t handle the workload required to bring you to your pre-ICO and ICO stages. Make sure the company you’re hiring are on the same page with you. Help them develop a storyline and think far ahead to determine both your user base and your investor’s profile. Don’t expect things to fall into place just because you’ve got a great idea and an MVP, they will not. Follow the Rule of 7. Your project must be seen, on average, 7 times before a potential investor will make a decision to back you.
Have a roadshow, for the sake of getting acquainted with people in the blockchain industry, they can help you. Visit private events to speak with high net-worth individuals. Do your homework. There are a lot of useless events that can get you sidetracked and you will lose both time and money on them.
Use influencers as much as you can, they are greatly undervalued and can reach out to millions of people. Look for brand ambassadors, I believe this will soon become a thing, much more than it is now. Brand ambassadors, can increase your projects traction across the globe.
I will leave you with this
If you’re planning to run an ICO be prepared to:
- Be exhausted beyond your wildest imagination
- Part ways with A LOT of capital, ICO’s are NOT cheap
- Roll up our sleeves and learn to do things you never thought you would
- Meet a lot of fantastic people
- Be inspired by those surrounding you
- Be an inspiration yourself
How are your ICO’s vitals?
Find me on LinkedIn — https://www.linkedin.com/in/eugene-malahov/
Learn more about ToTheMoon — www.tothemoonlab.com
Reach out on Telegram — @ErinaceusEAM
