How to start an ICO? Many people want to know how to launch an ICO (Initial Coin Offering). Sure, it is the best way to raise funds quickly in the crypto industry. Crypto fundraising is not just hype, it’s more popular year by year, similar to crowdfunding you raise capital. When it comes to new ICO blockchain projects, start-ups can kick-start their business easily.
Although ICO fundraising is not an easy task to go through, and for this reason, lots of ICO projects have failed in the market. But this doesn’t mean it is unachievable. And that’s why you need to understand its process before you dive into action for your ICO launch.
In this article, we will guide you through the process of how to create an ICO and how token creation works.
How do I launch an ICO? Here’s your complete ICO Roadmap
Launching an ICO campaign is completely different than launching an IPO (initial public offering). It’s a different business model but time-consuming as well. There are three stages to launching an ICO, the pre-ICO stage, post-ICO stage, and the ICO launch. In most cases, the pre-public engagement phase, which includes all the processes before the first big announcement, takes roughly six months to one year.
The post-public engagement phase, which includes everything that happens between the first announcement and the actual token sales, normally takes around three months. This timeframe can be considered to be long enough to gain the public’s attention; majorly, Potential investors’ attention. And short enough for aspiring investors not to forget about the project and lose interest.
And when it comes to the team assigned to the ICO development, there is no rule of thumb regarding the number of people needed for the project to succeed. The goal is not to hire a crowd for the project, but to get professionals in every single area of expertise necessary for the project to come to life. That includes developers, Blockchain and cryptocurrency specialists, PR and marketing as well as advisors, partners, and early investors.
So, in the land of ICOs, there are no set rules, the competition is fierce, time is an illusion and the future value of tokens is not supported by anything but demand.
To assist you in navigating through this fierceness, we wrote a post about ICO meaning and next, there is a comprehensive checklist designed to help you launch your very own successful ICO.
1. Creating an ICO all begins with an idea
If you want your project to be successful, it has to offer a solution that the market currently needs. You need a clear ICO business plan. Think about smart contracts and keep in mind, this solution should be objectively better than what your competitors have to offer. To achieve that, you need to have a thorough understanding of your supposed market, know your target audience, and, most importantly, know what they will be willing to give you their money for.
If your project is sourcing its funding through an ICO campaign, it will need to have its token. According to CoinMarketCap’s data, there currently are over 1,500 cryptocurrencies in the cryptocurrency market. So, if your token is to survive this competition, let alone gain any value in the crypto community, it will need to be in very high demand.
To achieve that, you need to think of a way to integrate a cryptocurrency into your project in a useful and meaningful way, so that it becomes an essential and integral part of the product.
Do you need tokenization if you’re selling spoons? If your project will be using tokens unnecessarily, likely, that investors won’t even consider putting their money into your project.
A good way to test-run your idea and get some initial feedback would be creating a thread on the BitcoinTalk forum, tagging it [pre-ANN] for pre-announcement.
2. ICO Prerequisites: Is starting an ICO viable?
ICOs are currently the most regulated aspect of cryptocurrencies there is. This is due to the high volume of ICOs shutting down and running away with the collected funds or simply being exposed as scams. Therefore, we need a clear ICO process.
Still, in most countries, Initial Coin Offerings are either legal, regulated, or subject to future regulations. So far, only China and South Korea have explicitly banned ICOs in their respective jurisdictions. Investors should always do due diligence before supporting a new company.
In the US, citizens are required to disclose any income earned and wealth held abroad to the Internal Revenue Service (IRS). Moreover, the regulators, such as the US Security and Exchange Commission (SEC) are prosecuting ICOs that are not compliant with their strict Know-Your-Customer policies. Because of that, a rapidly growing number of projects, such as Goldmint, Datum, Monaco Visa, and many others have explicitly exempted US citizens from buying their tokens.
The bottom line is you need to learn how to navigate the cryptocurrency regulations that are currently in place and pay close attention to any future changes to them. This probably goes without saying, but still, don’t break the law. Hiring a lawyer with experience in cryptocurrency and ICO regulations wouldn’t go amiss.
Keep in mind though, even if you’re not breaking any laws, any shady activity on your part, especially about handling the investments, may result in your project being labeled as a scam by the crypto community. If that happens, your ICO would have slack and is doomed to fail.
So, not only do you need to obey all the relevant laws and regulations, you need to be completely transparent in how you’re going to handle people’s money. Every market and region got its own regulations. Singapore, Switzerland, Lichtenstein, Panama, and Seychelles are popular places for token offerings. Spendings, taxes, fiat withdrawals, and any other financial aspects of the project need to be thought out to the very last detail.
3. Create an ICO Token
Create your own token. Think of your project as a human being. The technical architecture is its skeleton that supports its entire body. Blockchain technology and the token (your digital asset) itself function as blood vessels, enabling the whole body to fully function.
Firstly, you need to have a solid marketing strategy and distribution plan. And this heavily depends on a particular ICO’s requirements and plans. For instance, there can be many different stages of the token sale, including but not limited to a private sale, pre-sale, the actual ICO, and a general sale.
Different structures work for different ICOs. Back in 2013, NXT managed to raise $16,800 worth of Bitcoin simply by collecting donations to an anonymous wallet via the BitcoinTalk forum. Interestingly enough, after all these years NXT’s ICO still holds the number one spot in terms of Returns on Investment.
On the other hand, we have Telegram which managed to raise $850 million during a rather secretive pre-sale, and they are preparing a second round of pre-sale, aiming to double the number of investments even before the actual ICO happens.
Next, you need to clearly outline how exactly the tokens are going to be distributed. Decide in advance the number of tokens that will be issued in total, how many will be distributed among your team members, and how many will be sold during each stage of the token sale (selling your own cryptocurrency). Finally, decide in which particular scenario you will issue additional tokens.
When it comes to blockchain platforms used to issue tokens for ICOs, the market isn’t that competitive. According to the ICOWatchList data, 81.7% of projects use the Ethereum platform, while the other 9% opt for developing their custom blockchain platforms. There are, of course, other services such as Waves, Stratis, or Hyperledger, but even their combined share of the market amounts to just 3.7%.
Creating the token itself is a relatively easy process, especially when it comes to Ethereum’s ERC20 tokens. Ethereum’s website even lists the source code mode you will need to use. However, customizing certain aspects of a crowd sale logic for your tokens might be a bit more difficult, so if you’re not exactly tech-savvy, consider hiring a professional to do that for you.
4. Write a White Paper
A white paper is a mostly technical document that describes your entire project in every possible detail. Ideally, it should cover everything: market analysis, your vision of the project, its development strategy, architecture and goals, information on the token and its distribution, legal issues, your available resources, a description of your team, early investors, and advisors, and so on, and on. Everything.
Of course, not every possible investor will carefully read through a detailed technical description of your project. Maybe ten people will read the entire thing. But it’s those ten people that you need to satisfy with the white paper because they are capable of bringing some serious problems to your ICO.
Blockchain enthusiasts have a great understanding of technical aspects and a substantial amount of expertise, they are extremely prominent and valued people within the community. They are opinion leaders with audiences of tens of thousands of people. If you’re running a big PR campaign, but your project has some obvious flaws, those people won’t miss their chance to expose them.
5. Launch a Website
Content. People are only really interested in three things: the team, the project’s aims, and the measures in place to ensure the protection of the investors’ interests.
One of the first things you’ll see on Nuvus’s website is the detailed breakdown of the token sale structure. Not only does this block present the information, but it also heavily contributes to building FOMO or Fear of Missing Out.
The ‘team’ section of the website should contain names, high-quality photos, brief biographies, (focus specifically on team members’ skills relevant to this particular project), and links to social networks. Personify the project.
The ‘Team’ section of the same ICO should’ve been more informative, we don’t even get to know those people’s roles in the project.
ClearCoin actuates bios, which is extremely helpful. Although, those could be shorter.
6. Publish your Roadmap
Another hugely important section of your website is the roadmap. It should contain clear and realistically achievable goals and set timeframes. A roadmap with some important milestones already being ticked off will undoubtedly give the investors a lot more confidence in your project.
Ideally, your timeline should include set dates of an alpha release, beta release, public release, and all the future milestones you deem necessary to mention. The dates shouldn’t be vague, you need to be as specific as possible. A breakdown of costs associated with every task outlined in the roadmap would also be a rather good idea.
Roadmaps can be presented in various forms. The examples above from Nuvus, Sapien, and PikcioChain contain both history and plans, are rather informative, and set concrete dates in terms of quarters.
7. How to sell ICO tokens?
Finally, decide on how to sell ICO tokens. Make sure that all the information concerning token distribution is easily accessible to your future investors. Let them know what portion of your project’s currency will be distributed among the development team, and how many will be available to buy.
Traditionally, links to the project’s social networks are listed at the bottom of the website. Just make sure you know your customer (KYC) and develop a clear AML (Anti Money Laundering) system. This will ensure that you are selling ICO tokens without upsetting regulators.
8. Structure your ICO Project
Of course, there are always other options, as demonstrated by the clever placement of this section on top of the page on ClearCoin’s website:
The Layout of your ICO
Once you have all the content ready to be published, take some time to think about the website’s layout. The absolute majority of projects these days are opting for a single-page structure. Without a doubt, it’s a very convenient and easily-accessible way of presenting all the necessary information in the exact order it’s intended to be. Still, you and only you will know the most suitable structure for your project’s website. Also, think about publishing your code on GitHub.
Now, one thing you don’t want your website to do is to be down at any point in time. Once your ICO starts, provided it got sufficient interest from the community, thousands of people will be flocking to your website all at the same time. The last thing you’d want in this situation is your website crashing, so make sure to invest in a good and reliable hosting service.
Moreover, hacking and DDoS attacks are also very common threats for any project running an ICO. There have been many instances of official websites being hacked and the wallets’ addresses being replaced. As a result, investors unknowingly sent their money to scammers.
Also, if you’re running a big PR campaign, make sure to take all the precautions necessary to protect your project from phishing attacks. It is quite common for fraudsters to accompany a DDoS attack on your server with an all-out spam attack across every possible social channel with a message saying something like ‘our website is temporarily down, use this link instead.’
The website’s design should ideally reflect the nature of your project, it has to be reliable, look slick and professional, yet be friendly. Even the tiniest mistake in, say, text formatting will repeal a lot of investors. Consider hiring professionals to both build and design your project’s website.
Here’s roughly what the perfect website should include:
- Subscription form
- Presentation Video
- Roadmap: what, when, and how you’re going to do
- Description of your ICO
- The team: high-quality photos, short bios, social networks links
- Press coverage: pictures with Vitalik Buterin and other prominent members of the cryptocurrency community, links to articles and publications, videos of presentations, and talks
- Description of your product
- Real-life cases
- Documents: terms & conditions, legal, whitepaper, etc.
- Partners, advisors, early investors
- Contact information and links to the project’s social networks account
Translating your international ICO
It is also worth pointing out that if you’re developing a truly global project, you might want to consider translating your website into the mother tongues of your target audiences. When it comes to ICOs, the most useful languages to translate all the relevant information to are Chinese, Japanese, Korean, Russian, German, French, and Spanish.
Considering that it costs around $60.000 to create a successful ICO from scratch, you will only need to allocate a relatively small amount of money for translations. Depending on the language pair, a translation of a 25-page white paper done by a professional or an agency should cost somewhere between $150 and $300.
If you do decide to create a multilingual website, make sure that you hire professional translators who are good at their job. Even the tiniest of mistakes will result in your project looking unprofessional and losing potential investors.
9. Crypto Marketing and PR
So, you have everything taken care of. You developed an idea, gathered a dedicated team, wrote a white paper, created your token, and made sure your ICO campaign complies with all the applicable laws and regulations. Now, it’s time to promote it. It will take huge investments to advertise and make it viral on social media. Otherwise, there is no chance of you making any money. Also, think about launching a bounty program. Then launch your upcoming ICO on different platforms.
What does it take to make an ICO Successful?
Whether you’re a start-up founder looking to raise money, or an investor assessing an untested project, it’s essential to know what it takes for an ICO to be successful. While it may be hard to spot the next Ethereum, it is much easier to recognize the warning signs of a potential scam.
Investors should always do due diligence before supporting a new company. This is one of the oldest tenets in the financial world, but it nonetheless bears repeating. For novice investors, it’s easy to succumb to herd instinct or fear of missing out. When it comes to ICOs, there are at least four things to consider.
ICOs allow companies to fund their projects by selling tokens to access a network or service. Investors buy the tokens hoping that they will gain value after a successful network launch.
To understand a token’s potential value, you need to understand how and why it will be used. If there is a clear reason for people to own and use the token, the price will likely stabilize after a successful launch. If the main use for a token is market speculation, it may be susceptible to long-term volatility.
Successful offerings need to strike a balance between fair distribution and budgeting for the future.
The Business Case
Research as much as you can about a new business, including the target market, regulatory environment, and any likely competitors. This is another common pitfall: many new startups struggle to stand out, especially if another company has a first-mover advantage. If a startup is trying to launch an ICO in a saturated market, there should be something that sets it apart from the competition.
It is also important to ask what service the company plans to provide and whether there is enough demand to support it. If a company does not have any competitors, that may be a sign that other businesses do not think the model is a profitable one.
Need more information on how to set up an initial coin offering?
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What makes for a successful ICO?
A successful ICO clearly states the maximum coin supply, and the number of tokens allocated to all stakeholders. Most important is to show how tokens are distributed. You must have a clear message, a strong team, and a solid business plan. Never underestimate the cost of a strong marketing strategy.
How much does it cost to launch an ICO?
Listing an ICO token on a cryptocurrency exchange can cost promoters anywhere between $1 million and $3 million. The wide disparity in their ranges is dependent on reputation and access to quick liquidity. The lower end of that estimate is for a “reasonably regarded token” while the higher end ensures easy access to quick liquidity through exchanges that offer fiat conversion services.
Can I launch an ICO for free?
Sure you can, but it might not become successful. Launching an ICO token is a very demanding task and requires a huge sum to create and launch a valuable token. The price varies and a rough budget of $1 to $3 million should be made.
Which ICO launch platform is the best?
The best ICO launch platform is Binance Launchpad. If you are looking for a top pre-sale platform then have a look at AscendEx or Huobi Prime. When it comes to an IDO then we can reccomend KuCoin Launchpad or Kick.io.