Since their early stages in 2014, along with the introduction of ICO platforms such as Ethereum, the number and scope of ICO's has grown exponentially. In late 2017 ICO's raised more funding than tech startups and partly thanks to success of the ICO's, more cryptocurrency were exchanged daily at the peak of 2017 than the daily volume of the New York Stock Exchange.
The ICO democratizes venture capital investing and makes it accessible for the masses. This is the reason why the
concept is so successful.
An ICO provides a digital contract, which is secured by its own protocol. This means in simple terms that the fundraiser doesn't need any institution to guarantee itself. The focus moves from the public offering to the product itself.
The ICO generally speaking can be an access to use the product, a security to finance a product, or a digital asset that represent an already existing real world asset. There are plenty of subtypes of these three main generic types. These generic types of digital contracts are often, but not always, reflected in government regulation regarding ICO's.
Each type of ICO can be generalized as a DAO, a Distributed Autonomous Organization. The digital contract that governs the token the customer purchases governs itself in digital space, thus the description.
Maybe you have considered to finance your preferred idea through an ICO?
This article takes you through this process step-by-step, involving general good governance practices and proven methods of successful execution of your project.
The steps, towards a successful ICO, in a chronological order;
- Form an original idea
- Gather a team
- Gather early-stage investors
- Prepare a Minimum Viable Product
- Do due diligence
- Get likeminded advisers
- Keep good media relations
- Consider an airdrop
- ICO rating
- Keep a long term exchange listing strategy
- Do a real world pilot
- Keep practical corporate partnerships
- Deliver first, hype later
- Form an original idea
Your idea is the beginning of your journey towards success. When you catch your idea, write it down in a single phrase.
Then look for it on the Internet.
Refine it until it's original enough.
Only then take a step ahead.
Research the market
Before you begin to work on your product, you should do some market research. During the market research, ask these questions:
-Who else is doing something in this space?
-What does the competition do?
-What are the stregths and weaknesses of the competitive products?
-What problems does the competition solve?
-What stage is the market in?
-Who are the institutional investors involved in the market?
-What is the industry support regarding the competition?
-Does the competition want collaboration or is it dog eat dog?
-What regulatory challenges are there in regard to entering this space?
-What kind of investment is required to enter this space?
-Where is the best place to incorporate? can we travel there? does the place of incorporation positively influence entering the market?
-What kind of economic and social potential does the market in general have?
-What is the ideal corporate structure, according to the competition? not according to your team. According to the competition? Who does what?
All of this goes in your business plan, so answer these questions and share the results with your team.
A Startup Canvas [link] is a great help at this point.
- Gather a team
An ideal team is composed of average people of diverse talent. This is much better setting than an all-star team or a team with a few star advisors. The reason for this is simple: A team where there are many different perspectives will together improve the product much faster through crowd intelligence than a team that relies on a single expert to deliver tangible results.
The talent should compose of at least, but not limited to:
-Technical talent, ie. can do programming
-Practical talent, ie. has done something similar before
-Economic planning talent, ie. has delivered any kind of project before
-Media talent, ie. knows how to sell
-Conceptual talent, now this is my own idea, someone who has the skill to explain a complex idea simply enough so everyone can understand it
-Legal talent, ie. someone who knows how to implement something new into existing laws and regulations, so the business is done by the book regardless of it being a new thing
-Startup management talent, ie. someone who has worked with growth companies before
-Someone who can market your product in your desired geographic area.
That's it. That's the basics. The more talent you can get, the better you're off. The next step is teambuilding. Your startup team is like your sports team. You must like your project and you must like to work together. Regular meetups and teambuilding activities help towards this goal.
- Gather early-stage investors
Your investors are your advisors.
The earlier there are a group of knowledgeable investors on board, the higher are the chances that your ICO is successful. This is maths, so don't argue. Talk to people about your product, no matter what it is. Get likeminded people on board. When they have a little bit of skin in the game, they have an interest to steer you in the right direction.
An ideal EARLY stage investor is NOT:
-Your spouse / romantic partner, friends and familymembers. The reason for this is simple: They probably have thought about YOU, but you haven't made your PRODUCT clear enough for them to understand. Get someone who understands your PRODUCT instead. Of course, sometimes there are exceptions. Exceptions confirm the rule.
Regarding romantic partners, spouses and parents especially, there's normally enough bias to derail any project. Avoid dealing with your romantic partner, spouse and your parents as much as you can. Exceptions confirm the rule. Romantic partners, spouses and parents who understand your IDEA and support your IDEA, are assets for the team. Just remember that only what is written in the contract, matters. Emotions have to be sidelined in business. If your company goes down in a breakup, a divorce, family argument or a subdivision, it won't be the first time this happens, and probably it won't be the last time it happens, too, so be considerate.
-A bank or a credit institution. You'd have to go an extra mile to be crazy to get a loan to finance early stage development. A loan at this stage is a liability. Don't even think about it.
-A cryptocurrency exchange, binary options, the lottery, etc.
-A widely known investment fund that barely knows you. If they're interested, they're interested in buying you out the first moment they can. You should sell shares, but you should't sell out at an EARLY stage, if you pretend to know economics at all.
Clear enough?
An ideal EARLY stage investor ideally is:
-Someone whom you don't know personally, to minimize bias.
-Someone who isn't too distant from you, to minimize greed.
-Someone knowledgeable in the field of business, not technology, to maximise the exposure and experience the investor can bring on the table. These parts are even more important than money, don't argue. I know what you're thinking. That you can just pump the token value later. Look, it doesn't work like that. You need practical experience in the market to sell your product in the first place.
-Someone who can bring your message across in the media. Media relations for any startup, including an ICO, are more valuable than gold, Bitcoin or any amount of Ethereum in the vault. Media will make it or break it, especially when competition is tough and when there are a dime a dozen similar projects. Even if you WERE better than the rest, someone has to tell this to the audience. Get someone who knows their way around the press.
-Someone who believes in your idea. This might sound like confirmation bias, but it isn't. Get someone who will cheer you up and kick you in the butt when you feel lazy. Ideally this is the same person as the ones mentioned above, but you never know, this money will make the team feel encouraged along the way towards the crowdsale, and someone has to pay for the conference trips.
- Prepare a Minimum Viable Product
A Minimum Viable Product, an MVP for short, is ideally a demo version of your application with all the basics needed for it to operate, within a sandbox. In the world of dApps, this means that the application may demonstrate it's functionality to the stakeholders and prospective investors within a testnet environment.
To produce a successful MVP, it is recommended to make a checklist of what the application must do, what the application should do, and what the application would ideally do and then square in on the most important parts, minimize the functionality and to build a flowchart. The ideal dApp is clear, short and contains as little information as possible. If the MVP contains more than one digital contract, each digital contract in it is clearly linked. All technical attributes, all functions and everything that is actually copied from StackOverflow or other sources are clearly referenced. Licensing in an ideal MVP is clear.
Getting developers to work for your product is essential and required at this stage.
Branding, security testing and auditing in the case of an MVP are secondary.
These parts are valid for consideration only after the MVP is seen by the investors as good enough to become a commercial product.
Prepare a Crowdsale contract
There are a number of different ways to conduct a crowdsale, which Vitalik has discussed in his article.
The most common and the most successful ICO model has turned out to be a private pre-sale followed with an airdrop, followed with a public pre-sale, followed with a soft cap or two representing a milestone mentioned in the whitepaper, followed with a hard cap.
It is common that an ICO is divided into stages.
MyWish Platform contains some good basic crowdsale contracts. The service costs 1 ETH per contract. The service is imparticular to the legal aspects of your ICO. It's simply an e-commerce service for crowdsale contracts. https://crowdsale.mywish.io
- Do due diligence
I've already written an article on this subject.
See the article.
Consider a product audit and security testing as a part of due diligence. This is important and this should be done right after the MVP is ready.
Branding and end-user app development should come after the audit and security testing regarding the MVP is completed. The investors and the users appreciate an app that keeps their money safe.
Decide where to incorporate
Based on your market research, your early stage investors, your team, your MVP and your preferred crowdsale contract, you should at this stage be ready enough to incorporate.
Do it now. You won't have time to think about it later.
Actually, the earlier the better.
I'd personally incorporate even before the MVP and the crowdsale are ready. The investors like it when their money is in good hands.
At this stage, an exit strategy in case your company goes under is good to have agreed upon.
Assume it's like the parachute you have in case you need to jump, but don't fly like you need to jump.
After incorporation, the most important part on your schedule should be to get the first paying client, so the MVP should be ready at this stage as soon as possible.
Aim for the crowdsale.
- Get likeminded advisers
Your advisers are the ones who really decide whether you succeed or whether you crash and burn. They're the ones who have the most experience and the most or the least interest in your team along your path to success.
Famous advisers vs. the Likeminded
-A famous adviser is usually distant and lazy. The name sits on your website, but the adviser hardly has time to contribute to your work or to give interviews. In the case when they are interested, you're either lucky or steered towards the advisor's goals. Look for especially the warning sign of too ambitious goals. Your startup shouldn't depend on a single customer. On the other hand, a famous adviser will bring you attention among the public.
-A likeminded adviser engages your team on a daily or weekly basis and has the hang of the business. This type of adviser will contribute to your work, hustle you connections and share their ideas with you as though they were a teammember. Don't get fooled, though. An adviser is still just an adviser. Even if their goals weren't lofty on the first sight, be aware that they are. Listen to this kind of adviser keenly, but your startup shouldn't go too far from the original idea just to satisfy someone else's goals. Treat this type of adviser as a good second opinion.
Then get them both.
Talk to the likeminded adviser more when you don't have money. Talk to the famous adviser more when you already have established.
This is how you are the most likely to get the most benefit from advisers.
- Keep good media relations
Media will build your business, or media will keep it in the sidelines. A good media strategy is the marketing strategy of any successful startup.
As a cryptocurrency company, you should focus on the following:
Mainstream media
Forbes
Forbes is an essential magazine you need to be in contact with. Forbes is the mainstay and the centrefold of crypto-media in the eyes of the mainstream. Your startup basically has to appear on Forbes, especially if it's related to cryptocurrency. You only get noticed if you appear on Forbes, capiche?
Fortune
Fortune runs regular reviews of new ICO's and startups. It reaches a wide mainstream audience in the financial industry, so this is the media that you should consider prior to your crowdsale. It's one of the best ways to reach potential early-stage investors to your ICO. Especially in the pre-sale phase.
Cryptomedia
Crypto-media will get interested in your product slightly after the mainstream media, which is kind of counterintuitive, but can be explained with the fact that crypto-media usually gets inundated with requests from the crypto-scene. Once you've been mentioned on at least one crypto-media outlet however, others will run your story.
Cointelegraph
Cointelegraph has been around since ~2013, and has become a mainstream crypto-magazine, which runs general topics, mostly paid reviews and news from areas that affect most users. From a startup's point of view, Cointelegraph reaches a wide audience among cryptocurrency users, but doesn't go specific on the tech. It's a good resource for post-crowdsale stage. Cointelegraph will run your story if you impact the scene outside of the crypto-scene.
Bitcoin Magazine
Bitcoin Magazine is the first and the most classic crypto-media in the scene. Originally it covered general topics, the first Bitcoin startups and the first ICO's but nowadays it's more of a journal for the general public. Bitcoin Magazine for a startup is like Cointelegraph, ideal for the post-crowdsale phase. If you have significant impact outside of the crypto-scene, Bitcoin Magazine will run your story.
NewsBTC
NewsBTC began as a network of bloggers around ~2014 and quickly spread out to become a good challenger to Cointelegraph and Bitcoin Magazine. NewsBTC runs stories from the ICO stage, pre-ICO stage as well as analytics and market research. This media is a good resource at any stage of the project.
Cryptocurrency News
Cryptocurrency News is a nerdier media, which publishes mainly for the keen technical user and average investor. The media runs stories about ICO's regularly. Getting covered by Cryptocurrency News should be done as early as possible in a startup's journey towards the crowdsale.
ETH News
ETH News focuses on topics within the Ethereum developer community and the business environment around Ethereum and smart contracts. The media will feature your story, if your startup makes progress in how smart contracts are implemented in the real world.
Let's Talk Bitcoin
One of the first Bitcoin and cryptocurrency podcasts. If your ICO makes significant progress in the crypto scene, they'll talk with you and you get to promote your cause as long as you talk about general topics.
Future Thinkers podcast
Future Thinkers does about hour-long podcasts from diverse topics loosely connected with crypto. If your idea is groundbreaking, they should probably accommodate you with a slot.
Other notable podcasts
Kenn Bosak, Tim Tayshun, Mad Bitcoin, London Reel, Max Keiser, Dollar Vigilante, literally any podcast from the crypto scene.
Famous social media -exposing media driven from the Silicon Valley:
NowThis, Business Insider, TechCrunch, Gizmodo, Engadget, World Economic Forum, anything that is frequent on everyone's social media timeline. Focus on making a catchy viral review video.
Television:
Appearing on a satellite channel is generally better than appearing on local media, except if the local media considers the target market and your product is ready for deployment.
Therefore, when you're still in development, getting interviews on CNBC, BBC, RT, AJ+, DW, and so on is much more valid than getting featured on a local TV channel but vice versa when you're out of crowdsale phase and delivering the app for the end user.
Local newspapers as media outlets are analogous to local television.
Local media in general builds your project's status within the local community. This should generally be done after your project has status within the global community. This strategy is suggested simply because success within your local community will most likely limit your strategy in other local communities, once you go global. This sounds a bit counterintuitive, but this is how it really works: It's easier to market something that is assumed the same branding regardless of the local context.
Own podcast
Own podcasts are always steps towards the goal. Link them up. For podcasts, DTube allows monetizing better than
YouTube in the long run. Using YouTube to promote the the DTube channel might be a good move, because YouTube increasingly prevents monetization of crypto-related videos. Uploading the voice on Soundcloud works well for bloggers who aim for a larger audience.
Conferences:
Participation in conferences is essential at any stage of the project, from the early stage to maturity - after incorporation.
The project should ideally participate in conferences with a presentation and in case of expos or foreign conferences, a booth.
The presentation and the booth should be equipped with brochures and/or gift packages containing clear instructions for participation.
A conference is a sales job. A successful conference is a successful sales job. Know your audience and seal the deal on the spot, if you can. For this purpose, reserve a restaurant nearby the conference area and have your contract templates ready. Keep and maintain the rest of your team including your legal adviser on line in case you're sealing a contract right away. This is how early stage Bitcoin startups grew in the first place. They got investors on board straight from the conferences. A good dress and dinner code is smart casual, dining and wining with emphasis on the wining.
- Consider an airdrop
An airdrop is a way to effectively advertise the ICO to the average user. An airdrop will save you costs and distribute your token to a good number of initial participants. Ideally an airdrop campaign is an effective way to educate the public about your token offering at the immediate run-up towards your crowdsale - when you already have early stage investors on board.
-Doing the airdrop
Optimal airdrop validity period seems to be around one week, on airdropalert. Longer times being exposed to the public will attract massive attention from generic users after free tokens. The optimal airdrop quantity is around $5-15 in value at the point of crowdsale. If there are less tokens or if the token value is projected higher in terms of dollars at the time of crowdsale, the optimal crowdsale is more valuable and shorter, up to $30 and up to five days. The highest airdrops have been over $100 in value, not listed on airdrop alert sites. A good example of such crowdsales is owndata.network. Some projects conduct up to three airdrops, each valued progressively lower in terms of dollars.
Before the airdrop, the ICO should be rated so the users can get a clear overview of the project.
KYC & AML
Airdrop for crowdsale participants
Some airdrops are available exclusively for crowdsale participants. This type of airdrop is meant to attract additional support for advertising from the investors themselves and is rewarded mostly for referrals. Typical value of a referral is around $2-10.
Airdrop for ETH holders
Some airdrops simply drop tokens for holders of ETH in a set ratio after registration. This is a strategy phasing out, because it's less popular than a lump sum of tokens. The user there for the airdrop is simply looking for free tokens. Only secondarily does the user consider the project interesting for investment, due to higher risks, longer waiting times and so on - associated with ICO's. This is why when conducting an airdrop, the organizer is better off focused on the advertising.
Airdrop for registrations
Some airdrops require the user to register on the website or download an app to claim tokens. Sometimes this kind of approach requires KYC. The most common way to conduct KYC is requiring the user to submit a copy of their government-issued ID and proof of address. Usually a bank statement, a utility bill and so on is valid.
Registration via Google Doc
Many airdrops simply have built a Google doc, where they ask the basic questions such as name, nationality, a few questions related to the ICO to make sure the user has read through the website and the ERC-20 compatible Ethereum wallet address. Some airdrops require basic social media tasks, such as joining a Telegram channel and a mailing list, following the project on Facebook, Twitter and sometimes Medium. By far the most popular social media tasks required by airdrops are joining a mailing list and a Telegram channel and answering a question about the ICO, which can only be answered after watching a promotional video.
Airdrop as a reward for bounties
Bounty sites
0xbounty
0xbounty is a decentralized bounty posting site, which is mainly used for social bounties. Developer bounties aren't usually posted there due to generic nature of the service. This media is good as an additional marketing service for catching regular users.
StackExchange/OverFlow
StackExchange/OverFlow is commonly used for recruiting outside of the crypto-scene. This site is generally good for posting developer bounties, recruiting new talent and promoting the project for techies. The service is good for auditing code.
Airdrop promotion sites
Airdropalert.com
Airdrops.live
Topicolist.com
Coinvigilance.com
Coinairdrops.com
Consider bounties
-Types of bounties
Contribution to marketing
Social media promotion
Coding milestones
Development suggestions
I choose to stay silent on what's proper here, because this depends highly on your subjective scope on your project.
- ICO rating
ICO rating is essential for every ICO. Once you've considered airdrops and your marketing strategy, you should have your once audited ICO audited once more, this time publicly, by an ICO rating service. These services will cost you some money, but they're essential for your ICO to be received by the public. Do it right before you begin to market your project for the wider audience.
ICOrated
ICOholder
TrackICO
Bestcoins.co
- Keep a long term exchange listing strategy
As a rule of thumb, exchanges charge money for the project to be listed first and ask questions later. These are gatekeepers for your project to be sold out. Much of your ICO proceeds actually go towards listing on the exchanges.
This is why you should oversell your ICO as much as you possibly can, regardless of your due diligence. Simply cover this part with business development costs. Listing on the biggest exchanges may cost you millions of dollars in the end of the day, paid in Bitcoin - not in token.
Generally the more valuable the exchange, the more it raises funds, and the higher the risk of token dumping.
Have your token dumped on a cheaper exchange. Then go for the most valuable exchange immediately after the dump, while the hype is still on.
Decentralized exchanges:
EtherDelta
IDEX
Qryptos
Centralized exchanges ordered by value:
Binance
Kucoin
Bittrex
Quoine
Huobi
Cryptopia
Livecoin
HitBTC
Coinexchange
Liqui
- Do a real world pilot
Your real world pilot is meant to attract MAINSTREAM media attention. Your crypto-marketing phase now is done. You can and should participate in crypto-conferences and maintain good media relations towards crypto-media, but once you're listed on an exchange, your main focus should be on the real world, traditional media and the paying customer.
Get your project profitable as soon as you can through real world deployments.
At this point, something groundbreaking, or alternatively something big in size will keep your customers and investors happy.
Developing country -focused pilots help your cause and customer relations.
- Keep practical corporate partnerships
Your real world deliveries need partnerships. Think these through your supply chain. Period. End of story.
- Deliver first, hype later
Many cryptocurrency projects choose to hype. This type of communication is mainly to drive sales. It isn't constructive and it isn't good for the scene or your product in the long run. Avoid hyping. Deliver first. Build your image as something that benefits your customer and as something your customers absolutely need in order to be better than their social competition. Don't be a Verge or a Tron. Be an Apple or a Microsoft. Be a Nokia, if it suits you.
Best of chance for your investment!