In this step by step ICO fund raising guide I’ll share my experience on how we raised $4.8 mln for one of 7marketz Inc. Group’s ICO clients during private sale.
ICO – Initial Coin Offering – is a popular way of fundraising for startups, thanks to the cryptocurrency trend nowadays. However, as easy as it may sound, many ICOs are having tough time reaching out to the right audience and ending up not reaching their financial goals. Meanwhile, some ICOs end up getting too much funds which raises question marks, “do they really need so much capital?!”
Being a libertarian in mind, I was first introduced to Bitcoin in June the 30th (my birthday) in Trakai, Lithuania during the Cycle Summer Camp by Lobo Tigre. Two days later I bought my $300 worth Bitcoins and was blown away by the idea. Time passed, supporters started to increase, and indeed the price of the Bitcoin started to fly as well. However, I and our libertarian partners never invested in Bitcoin nor any other altcoins for the sake of money, but their application. That is indeed what I’d like to talk about in the following paragraph.
Cryptocurrency investment – value investing
Sure, it is not an easy task for a blockchain enthusiast to explain someone with just $500 that when they are investing in any cryptocurrency, they are investing into an idea. Once a blockchain project succeeds, it attracts more users, which increases demand and higher demand translates into higher token prices. That is economics 101. However, ICO investors (if I may call them investors) nowadays, are driven by the hype, they want to invest $500 to become a millionaire the next day. If a token, does not “moon” within a few weeks, they call that token a failure.
On the contrary, experienced visionaries have double agenda while investing or supporting any ICO. Preliminary, they would try to understand the problem that a given blockchain startup is addressing. If the problem is valid, the next point is application. Does the given project have a sound application in mind or just using a ton of “fluff” in their white paper? Once they feel satisfied, they would then be investing.
Unrealistic tokens may succeed on a short-run as well. However when they are due to perform they are destined to fail. Bitconnect is a sound example of it. When we were first approached to represent the project, we saw loopholes in the process, thus rejected any connection. People on a short run made money, but based on the expense of others.
Every ICO needs to have access to 2 types of communities in order to reach their financial goals.
How to attract Retail ICO investors
Retail ICO investors are the most important target group for any tokenized project. As we mentioned above, without a decent mass support coins will not keep its value. Indeed, that is why governments are trying hard to scare off the retail ICO investors as well.
In order to attract retail ICO investors, new ICOs must make sure to meet the needs of these people as well. These are the requirements to attract strong ICO community.
- Have a whitepaper & make sure that it is reviewed by experts;
- Get your smart contracts audited and publish the results publicly;
- Have a strong ICO advisory board and make sure that your advisors are there for your project, and not just money (you can identify which advisor is there for just money in your first talk. Avoid the ones asking for retention fees);
- Have your founders listed on your ICO page;
- Get your founders in front of cameras explaining their vision for your project;
- Get your strong advisors in a video (like this one) explaining why they support your project;
- Work with agencies that have done multiple ICOs prior to you (ICO marketing is not same as other industries’ marketing);
- Have your ICO review on various platforms (I’d recommend ICO Bench, FintechEvents.Center, Hacked. If you are an ICO, talk with 7marketz Inc. Group ICO team to get discounts for these review platforms.
- Have a strong Telegram community and make sure to allocate more than 2 community managers;
- Have community management team internally with pre-defined FAQs (nobody else will support your project as much as your internal team, NAGA ICO was a superb example of it. Their community managers were there day and night. They still maintain 24/7 community service on their Telegram channel even after the end of the ICO.
- Use programmatic media buying to reach out to right audience and avoid paying for too expensive media platforms (some platforms ask over $100K for listing with too little ROI);
- Use social media marketing via influential people.
How to attract crypto funds to invest in ICOs
There are various crypto funds globally, while some of these funds are real, some are just full of words and hopes. Often, those funds (advertising everywhere) are the ones with the least funds and the highest demands. Therefore, based on our experience it is best to approach to people with inside contacts.
The process I personally follow with our large institutional ICO investors is rather strategic. Let’s say I want to attract a group of investors from Dubai. I first would identify my target audience and then find a mutual contact. From this moment onward our goal is to sell the project to this mutual contact first. If this mutual contact is sold, he will open the doors to our main target investing group.
Step by step ICO fund raising guide
If you are reading this post, it is either you are planning to host an ICO or you are having an ICO or perhaps you are one of those service providers trying to develop your service. In short, you are likely to go through 4 steps until you finish your ICO.
This is the stage where you identify your goals, write your business plan/white paper, develop your website, and work on smart contracts. This should also be the stage where you join various blockchain events to build yourself a network. Specifically, during your idea stage, try to join ICO presentation pitches and write down the questions every ICO receives and make sure that you are prepared for these questions on your white paper.
It is true that not every ICO project goes through private sale, however if done properly this can help you make strong partnerships and raise funds as well.
Before you kick off your private sale, make sure to sign key advisors with previous successful ICOs experience (i.e. NAGA ICO, Genesis Vision). Utilize their experience and contacts. It is common to offer 10-20% finders commission to these people. However, try to avoid those that come with retainer fees. Based on my personal experience they are the ones wasting time, just trying to make $15-20K fast.
A good opportunity involves contacting former investment bankers with startup funding experience. They often have good network of investors (not necessarily with crypto experience) that can invest $3-400K to kick off your project. In our most recent fundraising trip 7marketz Inc. Group’s Asian team raised $4.8 mln from India, Dubai, Vietnam and Japan in 3 days from 6 investors, by using this technique.
Avoid having pre-sale period longer than 3 weeks. Based on our experience, if an ICO pre-sale lasts longer than 3 weeks, people get to be relaxed (internally and investors as well) and that in return gives lower results. Meanwhile, those ICOs with 1 or 2 weeks long pre-sale stage tend to sell out. Perhaps, related to urgency.During your ICO pre-sale, you should also make sure to be present in at least 3-4 blockchain events. If you have an MVP, demonstrate it! You are likely to be approached by investment groups!