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5 Critical Steps For Creating an ICO

5 Critical Steps for Starting an ICO

Startups are always looking for opportunities to raise money. For most of them, raising money has always been a challenge due to many restrictive conditions with traditional lenders.

Through crowd sales introduced as a by-product of the blockchain technology, and Initial Coin Offering (ICO) for blockchain based ideas are emerging as alternatives to the traditional ways of raising capital.

In this article, we will investigate the ICO concept and find out how to leverage this new business funding model.

What is an ICO?

ICO is the abbreviation for Initial Coin Offering. An ICO is a means of raising funds where a company releases its digital currency/tokens to exchange (peg) for a well established cryptocurrency, like Bitcoin or Ethereum. The main point of having ICOs is to attract investors looking for an opportunity to make a profit on cryptocurrencies.

Once the company sells their tokens, they get the capital they need to fund product development, and the investors get complete ownership of the crypto token.

The main stages of launching an ICO.

  1. Pre-planning

Here, you will need to ask yourself some questions;

  • Is starting an ICO the best idea for your company?

  • What is the purpose of the tokens you will have? Some tokens are simply for trading purposes while others can have business equity based on the consensus in your business.

  • Does your project need to be on blockchain? Tokens may not be such a good idea if your business model does not need to run on the blockchain.

  • Is there a viable economic model behind it? Researching ideas will assist you and your potential investors to see whether the business will ever scale.

If your project has to be on blockchain and there is a viable economic model behind it, then an ICO might be the right choice.

  1. Planning

Once you are done with pre-planning, you can move on to the offering, token design, whitepaper writing, legal, safety precautions for your website against hackers and communication. During planning is where you decide the currencies you will accept and if a pre-sale is necessary. Is your whitepaper ready?

The whitepaper is a document that covers how the whole system works. The document should give the contributor all the information needed on the application as well as information on your team.

You also need legal advice from a law firm with experience in incorporating blockchain companies who will advise you on the process.

A working website is also a good way of running blockchain companies to give token holders accurate and timely info about your business' progress.

It is also critical to register on relevant sites and platforms.

Your smart contracts also need to be ready as well as a prototype that will give your website more credibility.

  1. ICO Launch Build-Up

You need to release details of dates, discounts, conditions caps or funding limits and how the money will be managed.

Write a registration tutorial if you are doing a registration based ICO.

Also, have explainer videos on the process of purchasing tokens.

  1. Token Movement and Handling Crowd Sales

At this point, you should have a live stream Q&A, and the management should be ready since you will be getting numerous questions from potential investors.

You should keep reminding exactly how to send in to ensure that they do not lose their crypto.

After the launch, you will need to create a tutorial that will show investors where their tokens are. You also need to build your relationship with exchanges where you want to be listed.

  1. Running the ICO

Now that you have had a successful launch, you need to ensure there is constant communication between you and your community. You also need to have a fiscal and monetary policy.

You need to know how you will manage the funds you have received through your ICO.

This communication is very important as it allows your token to grow and give a good return to your ICO investors.

Final thoughts

Raising funds through an ICO is not easier than using traditional means.  It is only different.

The bottom line is that if you want to start an ICO, ensure that it is the best move for your company, as mishandling ICO can have very punitive consequences to yourself, your brand, name, and reputation.