Last year was the year of the ICO, raising more than $4B, despite China’s ban in September and South Korea announcing its crypto exchange regulations at the end of the year. The year 2018 promises to be the year when entrepreneurs experiment with blockchain in hopes to solve existing problems and bring innovation to our daily lives.
Last month the crypto world received good news amiss the red wave that’s been hitting the market cap since the beginning of January when the SEC and the CFTC gave favorable statements about the overall blockchain and cryptocurrency world.
Companies are jumping in the token craze trying to raise money to fund their projects, unfortunately, many sales fail to reach their goal and get lost among the crowd.
At G3 Partners we’ve been involved in several token sales, helping our clients with their website content, advertising, community and social media management, media outreach and other essential services, all designed exclusively for the needs of each of them. We are currently working on two more token sales. One will disrupt the insurance industry and the other one the world of fantasy sports and e-sports.
Our work on token sales has taught us a lot. So, what makes for a successful initial coin offering? ICOs are essentially a form of crowdinvesting, so people buy tokens in ICOs for the same general reason they would participate in traditional equity crowdfunding processes: to have ownership in a business on the hope that the underlying business model will prove successful.
A potential investor will be looking at different aspects of your token sale to make the decision to participate. Some takeaways regarding the factors shared by successful ICOs from examining past ones are:
1. Most successful ICOs are by companies creating something related to blockchain or fintech
- Interesting product or business idea;
- ‘What’s the need for this token?’;
2. White paper
A clear and well organized white paper will help potential investors to better understand your project;
3. Strong leadership and team members with relevant backgrounds
‘Why is this person key for the development of the project?’;
4. Highly visible on-boarding of experts to advising team
They can spread the word of your token sale among their networks which are full of potential investors;
5. Stage of the project and VC investors
Potential investors are more willing to trust those projects that already have a track record and/or support of VC investors;
- Discussion threads, forums, social media groups;
- Reddit AMAs;
- Responsive on social media;
- Slack community;
- Bounty program: this will encourage people to help you to do additional marketing in different sites and languages;
7. Transparent and frequent communication
- Clearly communicated the use of funds, vision for company/product, and updates/progress;
- Main channels of information: Website, in-house blog, social media (twitter, facebook);
- Team members quickly answer questions that potential investors have: failing to reply to questions and comments from the potential investors will cause mistrust;
8. Media ‘hype’ leading up to the sale
Hype, anticipation, and fear of missing out drives many to invest;
One reason why the Tezos ICO (despite its current disputes) was so successful was that it presented an alternative amidst Bitcoin controversy.
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Here is a quick analysis of 2 successful token sales:
CROWDSALE DATES: 7/1/2017–7/14/2017
AMOUNT RAISED: $232 millionMAJOR PRE-SALE MEDIA:
- UK International Business Times: Tezos discusses its self-amending blockchain, slated for springtime release (Nov 2016);
- Bitcoin Magazine: Tezos Receives Funding for Smart Contact System from Polychain Capital’s Digital Currency Fund (Feb 2017);
- Wired: A Plan to Save Blockchain Democracy from Bitcoin’s Civil War (Mar 2017);
- Venture Beat: 4 reasons why Tezos could be the Netscape of the Blockchain(May 2017);
- Reuters: Exclusive: Billionaire investor Draper to participate in blockchain token sale for first time (May 2017);
PRE-SALE PROMOTION ACTIVITY:
- Tezos meetups in SF (Summer 2016)
- Made source code available to browse (Sep 2016)
- Breitman gives Tezos talk at Strangeloop Conference (Sep 2016)
- Set up Tezos discussion Facebook group
- Cofounders active in Tezos forum discussions and Reddit AMA
- Posted video walkthroughs showing how to contribute (1–2 days before start)
DURING SALE: Posted updates and info about progress of fundraiser on Facebook/Twitter.
- Gained attention because the timing was right- flaws in existing blockchain threatened existing cryptocurrencies and Tezos would ideally eliminate that flaw;
- Prominent team with relevant past experience;
- Founders were highly active in participation and discussion online;
- Extensive media coverage leading up to ICO created anticipation.
CROWDSALE DATES: 9/20/2017
AMOUNT RAISED: $42 million (150,000 ETH)MAJOR PRE-SALE MEDIA:
- Forbes: Could This Blockchain In Korea Be The First To Connect An Entire Country? (Aug 2017);
- The CoinTelegraph: Don Tapscott Joins ICON Foundation Board of Advisors (Sep 2017);
- The Blockchain News: ICON Foundation Announces Token Sale for First Blockchain Designed for Real World Use (Sep 2017);
PRE-SALE PROMOTION ACTIVITY:
- Heavy use of Medium to share latest updates;
- Slack community grew to more than 6,000 people before the token sale;
- Min Kim participated in a large number of media interviews and also offline events
- ICON’s track record played a large role in convincing people that it was a worthwhile token sale. With around 50 companies in Korea already using the underlying loopchain engine to connect their blockchains, ICON was seen as more than a white paper and a dream;
- ICON was also featured heavily in media, and that stretched beyond just cryptocurrency news. Outlets like Forbes were willing to cover ICON because it came across as more credible than other projects, and the people behind it were able to speak about real world uses, rather than just spew forth engineering ese.