Funding Your Business Effectively Through an ICO

Published in

AladiEx

5 min readApr 23, 2020

To initiate a business concept or promote your thriving startup, getting funding is a tedious process. In the adoption of blockchain technology as a new trend, this enables startups to conduct easy access to pre-selling of your services and raise funds in promoting your services.

Currently, most tech firms develop their tokens that allow the token holders access to the newly built companies’ products, services, and subscriptions. The initial coin offering (ICO) enables startups in selling those tokens as a way of fundraising before the launching of a company. By doing so, these startups can achieve enough seed capital from potential global investors. In the process, this promotes needed startup funding.

ICO basics: Tools to succeed

An ICO is a proven approach when raising capital for any business enterprise. For an ICO to succeed, it requires the right amount of community involvement, technical background, and regulatory compliance. If you are willing to take on the risks, you can get your target payoff. Success is attained in both raising capital and developing a community of supporters with your business concept.

Among those being introduced in the market today, AladiEx is a digital tool that enables any enterprise to raise capital for business owners of global projects in an affordable and hassle-free manner. Also, it helps investors worldwide to invest in potential projects easily. Also, using AladiEx helps them in asset management while providing them with vital trading tools.

From the founders of AladiEx, they believe that AladiEx is an ICO fundraising tool that is an essential development in the future during the initial fundraising phase. Read on this article and see whether an ICO is the right platform for you.

Different fundraising approaches

To get necessary funding, there are several ways any business to do it. Every approach has its pros and cons. For most enterprises, conventional fundraising works well for them. Below are some traditional fundraising methods.

Institutional loan. For small enterprises, this method is the most common. This can generate minimal and predictable return of investment. Applying for a bank loan or from a credit firm is straightforward. However, this involves several paperwork and proof of past cash flow. This is one benefit when you have an existing business with many years of filed accounting records. For many startups without previous cashflow, it is time-consuming to get approval from institutional loans. In some instances, you can get approved with a limited amount of loan.

Some business owners get personal loans or borrow from the banks using their assets (e.g. home). Although there is nothing wrong with funding the development of your company using your resources, this can be very risky. You are personally held liable for the firm’s success. Failure to pay on time your loan, your assets can easily disappear. Loan payments are a challenge for any business owner.

Venture capital, angel investors, and business development companies. Most huge firms in Silicon Valley were created based on venture capital. Other global companies get their startup funding from a form of private investment. Using seed capital derived from angel investors has become a norm for startups. You can gain good capital if you are selling an interesting business concept.

One drawback of this approach is that it takes some effort to search, promote, and pitch investors. Investors need ample time to do their homework (due diligence). Investors need to double-check everything about your startup like its founders, business principles, enterprise model, current revenues/expenses, and perception of the experts about your business.

Investors need to ensure that their investment is safeguarded. You need to present your creative ideas while everything in on point when executing them. Also, they seek to get some equity in the firm. It is like giving up some ownership and control over your startup before getting it operational.

An option to venture capital is relying on business development companies (BDCs). BDCs are publicly traded firms that invest in small to medium-sized private firms. A BDC is a managed mutual fund with several supporters. They opt firms to work like a venture capital. BDCs are created to conduct small investments with limited payout. You are required to trade in equity in the company to get a BDC’s support.

Partnerships. In some startups, they team up with an existing firm to put their business concepts at work. Creating a good partnership is quite challenging. You need more time building connections and pitching potential partners. These potential partners will evaluate your business idea before sealing a deal with you. Providing so much information, your potential partner may steal your idea.

Get a partner with a current infrastructure, cash flow, and capital as a good starting point. This may be challenging in the process but finding the right match is worthwhile.

Crowdfunding. This is an interesting trend in the initial funding stage like Kickstarter or Indiegogo. Crowdfunding campaigns ensure a good set of audience for your products and funding suitable to your target market. This means getting a built-in group of people willing to invest since the first day of the launch.

The success of crowdfunding is crowd management. This requires mailing out perks and rewards for the successful funding. Crowdfunding campaigns can produce huge amount of capital. By carefully planning the execution of your business concept, you can effectively raise tens of millions of dollars.

Traditional vs. digital fundraising

For most conventional business fundraising methods, these require collaborating with institutions and a lot of paperwork. Startups usually struggle to look for initial funding. The institutions willing to assist in business funding are created to reduce risks. This goal of avoiding risk is designed to protect any institution’s investment. This means most with new and different ideas experience some difficulty in funding.

Even crowdfunding, it has its limitations. What we need is a type of crowdfunding that uses innovative system. AladiEx is known to have an asset management system that enables you to invest, track, and spend. Learn more about this innovative platform by visiting us at https://aladiex.io/ today. At AladiEx, it seeks to assist millions of MSMEs with their funding needs for the next five years.