How to Know If Your Project is Right for an Token Crowdsale

Thinking of launching a project that needs funding? More companies are looking at raising funds through an initial coin offering (ICO) over more traditional investment paths, such as venture capital. Coindesk reports that ICOs raised $6.3 billion in the first three months of 2018 — that’s more than ICOs raised during the whole of 2017. And the money contributed to ICOs is fast surpassing the amount raised via early stage angel investing, according to CNBC.

For startups founders looking develop a new project, these numbers are enticing. But not all projects or companies are suitable for ICOs. Determining whether your project is the right fit for an ICO will save a lot of stress in the long run.

Does your project actually rely on blockchain?

Launching an ICO essentially means creating your own crypto token in exchange for established cryptocurrency, typically ethereum or bitcoin. Contributors who buy tokens for your projects tend to be hunting for the next big thing in blockchain — the technology that underpins cryptocurrency.

The first step, then, may seem obvious, but it’s important to establish whether blockchain technology will actually add anything to your project. If not, you may not need to go down the ICO route at all. Consider: What are the goals of your project? What problem are you trying to solve? Blockchain technology should be an essential part of your solution and future roadmap if you intend to launch an ICO.

You need to give contributors a solid reason to contribute to your project, so if you’re not sure whether blockchain will advance your project or if you can’t articulate the technical aspects of your project, it’s worth considering alternative funding options.

What is the competition like?

Today, ICO competition is fierce. Before you launch an ICO, do some research and a SWOT analysis. What competition is already out there? Are there any ICOs for similar projects?

Competition doesn’t mean that you shouldn’t go ahead with your ICO. However, like any business plan, you need to carefully consider the market and how to differentiate your project from what’s already out there before launching your ICO.

Do you have enough cash flow?

It’s difficult to launch a successful ICO on your own. Plan to have enough funds available to employ a team for at least six months, as you will need help for at least three months before your ICO launch. Your team should include blockchain developers, marketing specialists, graphic designers, web developers, legal advisors, translators and others.

Contributors are more likely to be interested in an early stage project if the team on board is experienced, entrepreneurial, and if you have the support of competent advisors, so be sure to include information about your company history and advisory board in any public-facing material such as websites or press releases.

Have you sought legal advice?

As with any business venture, you should seek professional legal advice before planning or promoting your ICO. This legal advice may also extend to your business structure and the type of token you create (see below.)

Are you able to create a sensible token?

The token you create in the Ethereum ecosystem will represent something your business needs to survive. Tokens can represent any “tradable good,” according to Ethereum, and are controlled by a smart contract, which tells the coin how to react in certain situations.

Contributors will be looking for details about your token, in which jurisdiction it was generated, how it can be used and whether or not it is classified as a security. These are all important considerations that will determine the regulation of your token.

Are you ready to market yourself?

You need to consider how to convince people to contribute to your project. This means ensuring that you have the right team in place and investing in marketing and PR.

A successful ICO lives and dies on its marketing prowess. Hundreds of ICOs launch each month, so you need to stand out from the pack. Give contributors a reason to consider your project by promoting your company and project, as well as your upcoming ICO.

A successful ICO marketing plan will include the following:

• A professional website
• A whitepaper outlining the technical aspects of your project
• A robust Telegram community
• In-person and online events
• Public relations (press releases and media pitches)
• YouTube reviews of early stage prototypes
• ICO listings
• Managed social media accounts
• Customer support
• Are you prepared for public scrutiny?

Launching an ICO means being ready to communicate with contributors on all matters — from your project, team and company to how the actual ICO will be conducted and what people can do with their tokens.

You have to prove to potential investors that your project is legitimate. Your project should have clearly identifiable goals and be able to solve a specific problem. This means opening your business up to a level of scrutiny that may not be necessary in other funding options. Ensure that your customer success operation is ready for the deluge of questions and comments that will occur before, during and after an ICO.

The risks and rewards of an ICO

An ICO opens up a lot of opportunities for startups seeking funding, but there are plenty of risks. Not all ICOs succeed, and even if they do, not all startups are ready to support increased enquiries from potential contributors. Consider all these factors before planning your ICO.

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