Fundraising for a startup can be done in multiple ways. For instance, crowdfunding, angel investors, venture capitalists, microloans, and IPOs are a few examples of well-known fundraising methods. Along with this, some startups are rising funds through bootstrapping, conducting events, and doing other ideas to raise funds.
However, entrepreneurs rarely know about another innovative and sophisticated way which is ICO (Initial Coin Offering), an emerging form of financing using blockchain technology. Reading about ICO can help you to be aware of a new and effective fundraising method.
This blog contains complete detail about the Initial Coin Offering and the role of economic drivers and the social identity of this funding method. So, it can help you to make decisions on fundraising concerning multi factors. Letβs get into the blog.
What are Initial Coin Offerings?
Initial Coin Offerings can be defined as open for all funding and an unregulated token selling process usually targets a wide range of investors in the market. It takes place usually for the funding of the capital. In layman's terms, ICO (Initial Coin Offerings) is nothing but the IPO of the crypto space. It's a process of raising funds by distributing newly developed tokens instead of shares and securities.
The money is raised by collecting cash from the investors in exchange for cryptocurrency tokens. Usually, the tokens bear some values that are equivalent to a certain amount of the coin launched by the company or products or services offered by the company. Such investors are often called token holders.
Through this method, the amount of money raised is commonly exceeded by any other traditional funding method especially compared to the beginning stage. In this ICO, investors used to invest in early-stage projects to get more benefits as early birds. This kind of fundraising method usually discloses data about the token sale, the underlying IT protocol and blockchain, the project, and the business model through a white paper document. That means anyone with interest couldnβt do the ICO. It has certain protocols and the proper procedure. Letβs check how firms are doing ICOs.
How Does an Initial Coin Offering Work?
If any individual entrepreneurs or a group of founders of a startup need to raise funds in Initial Coin Offering, then first they need to do the determining process, which means they need to decide how they will structure the coin and ICOs. In common, the ICO is structured like static supply and static price, static supply & dynamic prices, and dynamic supply and static price.
Structure
In the first structure, (static supply and static price) the company is allowed to set a specific funding goal that can be known as a limit. That means each token will be sold at a pre-decided price, alongside the total token supply being fixed.
Through the second structure which is the static supply and dynamic price model, the number of funds received in the ICO determines the overall price per token. And in the final model (dynamic supply and static price) the amount of funding received determines the supply. It can also be known as this kind of ICOs are dynamic tokens supplied at a static price.
Whitepaper
After deciding on the structure of the ICO, you need to release the whitepaper. It is nothing but a pitchbook that describes the pre-said information of the business like a project, objectives, goal of the project, total money needed for the project, and some tokens. It ensures the transparency of the ICO, the token exchange that encourages the supporters to avail the tokens from the project developers or the organization.
ICO -Final Stage
After publishing the whitepaper, the entrepreneur who wants to raise money through the ICO should have a valid platform to launch and sell their tokens. Usually, the token buyers buy the token with their fiat or digital currency which means the investors can use any other form of cryptocurrencies such as Bitcoin or Ethereum. This makes the newly issued token tradeable with certain trading pairs just like cryptocurrencies.
When ICO Goes Wrong? Exploring The Risks Behind ICO
Developing an ICO does not make your fund rise automatically. You need to forecast the risks of ICO failure and ensure the success factors. The amount of money raised through the ICO can be considered a metric to scale the success of the ICO. An ICO will be considered failed if it raises less than the minimum amount needed through it. Here, you can check the risks for an ICO that can cause failure.
- Uncertain regulations around the globe are a risk for ICO providers. It causes them fines, extra costs, or sentences concerning various regulations in the various nations.
- Another regulatory difference is the uncertain difference between utility and security tokens. It also confuses the investors and also the ICO providers.
- Unstable currency values across the nation's borders disturb the investorβs behavior. It can devalue extremely fast. investment. However, it can also attract more buyers from other countries.
- Since early 2018, the interest in ICOs has been warning constantly. It also disturbs the buying process.
- Issuing incorrect ICO projects and marketing campaigns with wrong or fake details to attract more investors will also lead to a lack of reliability in your products among investors.
These are the external factors that impact the growth and success of the ICOs. But, from the organizer's side, a few mistakes make the failure ratio high. Letβs check it.
- Assumptions - While preparing documentation and other legal work processes, a few organizers (entrepreneurs who are wishing to launch the ICO) mistakenly, assume about the regulatory norms and launch their ICO. It affects their ICO in the market and its sales. So, you need to be cautious about legal issues.
- Over Confidence - Despite, it looks like a simple term and factor, it can impact and affect entrepreneursβ mental stability more. For example, an entrepreneur who thought it was easy to raise money through ICO may get frustrated when they are facing difficulties. It causes them to abandon the project.
- Improper Prerequisite Preparation - When the entrepreneurs are missed to do the prerequisites like proper whitepaper submission, hiring team members, planning for an effective lCO launching roadmap, and others. It leads to operational error and loss of ICO.
- Inefficient Online Platform - When the ICO providers donβt have an attractive and convincing online platform, they couldnβt convert potential investors. So, they couldnβt sell their ICOs in the market. So, when entrepreneurs offer ICO without operative online platforms, there will be chaos for their investments.
Nowadays, Investors are coming across millions of ICOs and other concepts. They are showing interest in only a few which attracts more. The real fact is, that the UI of your online platform and design of the market campaign plays a vital role in getting the investor's first impression.
Because, initially, the investors donβt even have an idea of reading your product or service. The attractive UI of the online platform is the main factor for getting more investors. But many entrepreneurs are not having a potent online platform. They are just having an ordinary platform with the usual content and visuals. So, if you are planning to launch an ICO, prefer the most interactive and attention-seeking online platform.
How to Avail Engaging ICO Platform?
If you are at this part, then you must know the value of an online platform for ICO development. We admire your patience and heed the crucial part. Now letβs check how you can get the best ICO platform.
To get such a fascinating online platform for ICO, you need to choose the best ICO development company. Nowadays, many startups are emerging in this crypto space industry and providing ICO development services. But only a few of them are providing the following service at the best of its kind.
- Community Building,
- ICO Campaign Marketing,
- ICO Bounty Program,
- ICO Token Development,
- Blockchain Integration,
- Fundraising ICO Dashboard, and
- Complete help desk support.
Only through such an eminent ICO development company, you can get a persuasive solution to attract potential investors. CryptoApe is one of the highly reputed blockchain development companies that provide productive ICO development solutions.
By choosing us, you can simply create and launch the ICO in the market with minimum intervention as we have eminent IT experts to take care of the ICO development process. We do,
- Ideation and Whitepaper Creation,
- Pre-ICO Marketing & Dashboard Setup, and
- Launching Initial Coin Offering Open To All Platforms.
Alongside, youβll be provided with Admin Panel, Coin Transaction History, Wallet Integration, Whitepaper, User Dashboard, User Wallet, Payment Gateway, Smart Contract, and other sophisticated features and tools.
Itβs a simple task to start your ICO process to raise funds for your startup. If you have any doubts or hesitations in the ICO development, feel free to fill out the contact form on our site, and our expert team will communicate with you to provide clarifications.
Summing Up
We, CryptoApe, have many years of experience and expertise in ICO development for any kind of startup in the crypto space. We can provide you with the best service and the extraordinary final product to make you a successful startup funded through ICO. It's time to get the advantage of the well-crafted ICO platform and service pack from CryptoApe.
