How to create and promote an ICO? ICO attorney in Bulgaria.
This outline points out the main points that should be strictly followed when marketing a new, start-up company in the field of blockchain technology and token public offering(ICO). My many years of experience as a legal consultant in the blockchain industry have led me to the below commented main conclusions for proper structuring of ICO projects. Consider every detail carefully, consult every stage, select a top team of professionals for the technical, financial, legal and marketing parts to successfully go through these particularly important steps of properly forming and promoting your ICO:
1.Formulate your product.
A huge problem with the ICO industry today is that most projects don't actually build a real business strategy based on blockchain technology. In my practice, I've come across many marketing gimmicks, landing pages, speculative "sales funnels", and so-called "UI/UX" mockups with no backend technology built in. You can get away with launching an MVP or beta version of a blockchain project and then doing the token sale, but I think it's reasonable to say that most startups will need to raise equity investment to launch their blockchain business. It takes funding to make money and your ICO is no exception. You need a product and your product needs to use your token as a financial instrument. Blockchain technology has the potential to change the world, but it requires serious professionals building real technology.
2.Present your token correctly.
Any successful token should be a combination of two things: presentation and speculation.
"Performance" as a criterion, showing performance is mostly the actual utility of your token, i.e. you need to explain how it adds value to its users, how it works on a technological level and why it is traded?
"Speculation" as a term rather points to how your token will be valued - does it actually have the potential to become an a priori payment instrument for a particular case, for a particular industry. If you want to critically examine your token, assemble a "critique team" - experts familiar with the blockchain industry, with the goal of having them challenge your ICO business model part by part, then ask the following questions:
- How does your token function at a low(tech) level?
- Who will want to buy and own this token?
- Why would users want to use it and in which industry?
- In what hypotheses would potential users need this token?
- Can the same task be done differently - without tokens?
- What happens when the value of the token rises or falls and what are the guarantees for the holder?
2.1. What are the types of tokens? Here are the basics:
Utility tokens(so called "utility tokens").
Utility tokens are the most common type. They are only used within a specific blockchain. Utility tokens imply different privileges for investors. Usually, with the help of such coins, users can use the goods or services that the company plans to release as part of its project.
Security tokens (so-called "security tokens").
These tokens are similar to securities on the stock market. The holder is entitled to shares in the company, a share of its profits and to receive dividends. Investors can take an active part in the life of the company and participate in voting to decide what direction the project will take. All these rights are described in a smart contract, and the list of investors and all the activities of the company are available on the blockchain.
Security tokens are closely monitored by regulators, including the US Securities and Exchange Commission (SEC) and the Swiss Financial Markets Authority (FINMA). They control that the circulation of such tokens complies with the legal regulations of certain countries, as security tokens imply official registration.
Linked to ordinary securities, security tokens are real investments of finance. Therefore, companies with these types of tokens are subject to additional obligations to comply with securities laws and they must also provide reports.
Compared to utility tokens, security tokens provide certain guarantees that investors will be compensated if the project fails or simply falls through. Accredited investors have the option to purchase security tokens after the project is launched.Although in this case there are also risks, as the investor is not investing in the coins themselves, but in the prospect of making a profit from them in the future. Examples of security tokens include DigixDAO, Siafund, Taas.
Payment tokens (so-called "cryptocurrencies").
Payment tokens are commonly referred to as cryptocurrencies and are versatile. They can be used as a reward for miners, a means of payment and an investment tool. Furthermore, payment coins are not backed by any assets. Cryptocurrencies can be used in the system, they are issued through mining. Cryptocurrencies include Bitcoin, Ethereum, Litecoin, etc.
3.White Paper.
"The white paper is essentially the business model that clearly outlines the technical and legal aspects of the product, the problems it intends to solve, how it will solve them, a description of the team, and a description of the strategy for generating and distributing tokens.
It is simultaneously a technical basis, a business plan, a marketing plan and a technical manual.
I can tell you from personal experience that writing a white paper is a daunting task that requires experts in finance, law, marketing, token economics, incentive models, and blockchain programmers. These are seriously complex papers and too few teams invest in the right authors and marketers for this component. Hiring vetted external authors(consultants) can force founders to be more rigorous and thorough, while poor authors of the content described will cover up gaps in thinking or product inefficiencies. In my consulting business, the technical documents we create must meet at least the following components:
- The existing market problem;
- who the product is;
- the competitive environment and the size of the market;
- key investment considerations;
- a technical explanation of token economics and use cases;
- development and launch timeline;
- ICO strategy (how many tokens to issue, token allocation, price, market cap, token release phases, payment processing, token deployment);
- incentives for token ownership;
- the team behind the project;
- legal aspects of tokens;
- marketing strategy;
Once a proper document is created, your technical team of blockchain developers can work to build the right product, allowing the business team to be confident and unified in conversations with investors even before the ICO campaign is launched.
4.Tokens are a financial tool are building real blockchain projects, not a funding method at launch.
You should be aware that tokens are not shares. Despite their attractiveness, tokens are not (yet) a good substitute for traditional venture capital, despite the growing conversation about public token offerings, which are essentially just an equity crowdfunding tool. The most successful tokens are those that are traded as options to launch real blockchain projects - you sell a future product to early buyers, and the future token has a specific financial and technical value to the buyer.
All this means is that the capital you've formed through the ICO is invested in the project, not the company, and there's no reason a company shouldn't be liable for its investment with its own capital alongside the ICO funds. Such an indication points to the responsibility of the person who announced the ICO campaign towards the investors and towards the whole business model.
5.Research your target audience.
When creating your marketing strategy, keep your target audience in mind. There are four main token buyers:
"Natural buyers" - investors, usually individuals who are genuinely interested in your project and want to use your token in the future. This is the most valuable segment as you get both a loyal user and an investor.
"Whales" - these are the so-called "bitcoin and ethereum whales" who are looking for token sales to reduce their exposure to bitcoin or ethereum and avoid paying the big taxes when converting cryptocurrency into real currency. You can aim for the big "whales" that can make your ICO sell out in 30 minutes, but don't count on it. Fewer and fewer of them are playing this risky game.
"Long-term investors" - these are institutional or private investors who will get into your campaign, stay in it for a long time, and want a real stake in the business.
"Traders" - short-term investors who will enter in the last days of the ICOcampaign and sell their tokens immediately on the first growth.
Focus your campaign on natural buyers and future users of your product. This is a 3-4 month marketing effort that requires hundreds of man hours, but provides you with the highest quality investors and long-term growth.
6.Set up your ICO pre-sale.
An ICO pre-sale is a symbolic sales event that will take place in almost all blockchain projects before the official ICO campaign is officially announced. Fundraising prices at this stage are significantly lower than the basics when launching an ICO campaign, and tokens are usually sold at a large discount. Many projects use pre-sales as a way to accumulate funds to cover costs incurred before the main ICO campaign, while investors see a successful pre-sale as social validation. This is very important in order to build trust with strategic investors, as they will usually ask for a meeting, a detailed study of the business model and invest not only through the ICO model, but also by selling shares in the future (in order to possibly secure their interests in a future listing of the business on the stock exchange).
Most ICO companies hold the pre-sale and the main sale within a few days of each other because they don't want the token price to move drastically between them. In the ideal scenario, the token price is the same and investors in the pre-sale receive more tokens as a unit. I have seen hypotheses where startups sell 2% to 10% of their tokens in the presale, depending on demand.
Typically, token speculators can expect a pre-sale discount in the 50% range, but keep in mind that many of these entities will sell your tokens at the first sign of growth, which is also part of the business, with the risk that you will then no longer know your investor directly.
7.Communication strategy.
Whatever you plan to spend on marketing efforts, double it. Here are some important elements to consider:
7.1 Video: an ICO communications strategy requires a video component. This is not an option. The four unique types of video formats that I have adopted when working with startups and ICOs are:
- Animation (basic or premium),
- Interview with founder mixed with existing footage of the ICO model;
-Premium product footage with advanced motion graphics;
- Micro videos.
7.2 Advertising: Ads with contextual and demographic targeting are a good way to increase your content marketing efforts and reach investors. While I'm skeptical of how much big token buyers click on ads to find their next token, your ICO's banner will repeatedly gain increased awareness and exposure. I would recommend experimenting with different types of advertising and pricing models (impressions vs. direct response) at different stages of the token sale.
The only potential downside is that advertising is more likely to attract traders and token hunters over natural buyers who will stay with you in the long run.
7.3 Public Relations: Quality PR is much more important than advertising when it comes to establishing credibility, positioning your company as an innovator and convincing people of your business model. As the mainstream media becomes increasingly cynical about ICOs, getting the story right outside of the ICO is crucial. Be sure to communicate with your audience before and during the campaign. Tell readers about how their world will be different with your token as part of it, rather than explaining how your token will go up in value. Tell the story of your business - it builds trust.
7.4 Interviews:Do as many interviews as possible with key journalists and video bloggers months before your ICO to offer tokens. These people will take up your project because your story interests them. As your ICO campaign gains momentum, more video bloggers will want to interview you. Take every chance you can by rolling it out today, not tomorrow - this is important in terms of presenting your business model.
7.5 Blogging: Good ICO campaigns do a great job of leveraging existing blogging channels like Linkedin, Medium and Hacker Noon to take advantage of the audience and reach these platforms already have.
All content that your ICO produces should be distributed to both Medium and LinkedIn, as well as any other industry-specific media channels, such as Hacker Noon.
7.6 Reddit & Bitcoin Talk: In addition to creating your own reddit channel, there are several themed marketing inclusions worth doing to find your target investors, including: /r/ethtrader/(about 85,000 subscribers),/r/icocrypto (about 9,500 subscribers) ), /r/bancor/(about 2,600 readers).
7.7 Rating agencies: there are special rating platforms that rate and audit ICOs for investors. Ratings are determined by bots as well as a wide range of experts who provide analytical, legal and technical information in their reports. Rating agencies include Digrate (1 BTC), ICO Rating ($20k) and ICO Bench (0.4 BTC and up).
7.8 Discussions on Quora: There are many discussions on Quora about various ICO projects and specific cryptocurrencies that you can actively participate in and direct them as a topic to your ICO landing page.
7.9 Slack & Telegram: Creating your own channel on Slack and Telegram should be present in your communication strategy. Potential investors literally live on these channels and can communicate with project founders, team members and each other. These channels should be monitored around the clock, with all questions and false accusations raised by detractors answered in a timely manner. Be honest and keep your word - your community is your greatest resource.
7.10 "Roadshow": Meetings and conferences should be the main focus of your marketing activity as this is where you will find and communicate with your supporters and investors face to face to get your first capital. If you are targeting the Chinese market, for example, you should attend (and host) events in China. If you are interested in the Russian market, go to Moscow, etc.
Many teams choose not to do their roadshows internationally and this undoubtedly hurts their token sales. You can find a list of upcoming events on Coindesk and Coinschedule.
7.11 ICO calendars : Bloggers and journalists often create lists of "best ICOs" (https://itsblockchain.com/top-5-upcoming-icos-to-invest-in/) based on data from dedicated ICO calendars such as : Coinschedule.com, CoinGecko.com, ICOCrowd.com, ICOCountdown.com, ICO-List.com and Coinlist.com. Use these channels and connect with journalists in them.
7.12 LinkedIn: This channel is great if you already have thousands of followers. There are also hundreds of groups that discuss ICO projects.
7.13 Webinars: Schedule specific token webinars during the token sale using platforms like Zoom where your audience can engage with presenters and ask questions in a group chat. Instead of advertising your ICO, provide a direct connection to your viewers and discuss the different use cases for your system. Webinars are quite easy to run and advertise and give not only a real-time audience, but also hundreds of new enquiries to your email marketing campaigns.
7.14 Influencer Marketing: The biggest barrier to an ICO is establishing trust - trust in whether the team behind it will execute on their idea. One of the best ways to establish trust is through influencer marketing. Find the right crypto influencers for your business, incentivize them properly, and grow your audience exponentially.
8.Perspectives.
New, increasingly financially sophisticated and technically sophisticated blockchain projects are emerging on a daily basis, attempting to make a dent within the ICO industry. As this is happening dynamically, it is also evident that cryptocurrencies will be further implemented in the financial and banking sectors. Disruption and change in the market is inevitable and we will see regulations in the legal and financial framework that will weed out unscrupulous market participants attracted solely by the huge profits. This is just the beginning of an incredibly powerful, electronic fundraising model for new business projects, so all good things are to come.
For more on this topic, read the article "Regulation of Token Sales Internationally" by Atanas Kostov.
You can watch a video on our YouTube channel on the topic ICO here:
For a consultation on the matter, please contact the team of the "IUSAUTHOR" law firm here: This email address is being protected from spambots. You need JavaScript enabled to view it.