Understanding the ICO Fundraising Mechanism
Initial Coin Offering or ICO is a fundraising mechanism for a new cryptocurrency venture. ICO process is vital for the start-up companies for crowd-funding, in which new projects sell their underlying crypto tokens to fund project development. It’s somewhat similar to an Initial Public Offering (IPO) in which investors purchase shares of a company.
ICO Benefits
A significant advantage of an ICO for investors is that it is open to everyone. Just about anyone can set up an ICO, as customized token sales can be achieved through numerous platforms, including Ethereum. The costs associated with marketing ICOs and the contribution settlement are considerably lower than some of the other popular mechanisms used for fundraising. Not only that but hosting an ICO is bound to consume less time.
Go for Pre-ICO & Post-ICO Sales
Pre-ICO is the token sale event that Blockchain enterprises run before the official ICO campaign goes live. The fund-raising targets for Pre-ICOs are often lower as compared to that of the main ICO and tokens are usually sold cheaper. It also gives the prospective buyer an overview of the response that the official campaign might get before it opens to all. Post-ICO phase is all about delivery of maximum possible value for the customers and token holders. Development of the product and providing clear communication to the public is a key part of that.
The Course of Action while initiating Initial Coin Offering (ICO)
To commence with a composed ICO plan, company needs to create a whitepaper stating what the project is all about. It needs to specify the planned hard cap and soft cap and how much virtual tokens the pioneer of the project wants to supply and put on sale. Further, it should talk on the response about what type of money is accepted, and for how long the ICO campaign will run. After the white paper completion, the website comes into play, for large scale advertising campaign a team of technical specialists should be assembled. The focus should be on marketing the right time and right place to create an effective brand awareness using multiple social media platforms. The investors should be persuaded to buy token through existing digital currencies. Bitcoins or Ethers or other legal tenders could be used so that the start-up can obtain financing for the development of the project. Investors must be made to believe that those tokens would increase in value and get a high ROI.
Originally published at tokenasia.com.
