Initial Coin Offerings have revolutionized fundraising. However, delivering a successful pitch for an ICO is no easy feat.
Initial Coin Offerings (ICOs) have become an up-and-coming way to raise money fast. According to CNBC, ICO proceeds in 2018 as of early July totaled more than three times the proceeds from 2017, at $11.9 billion in total. Experienced founders that have previously run successful ICOs will tell you that it takes more than an idea and good PR to get funded today.
With a sea of new, and sometimes questionable, blockchain projects raising fast money, you’ll need to do much more to convince investors that your project is different and worth their Bitcoin or Ethereum. A persuasive ICO pitch is key to successfully selling your token regardless of whether you’re doing a private or public token sale.
Most teams end up overly focused on developing the product, only to find that they’ve neglected a critical part of a token sale: presenting a clear and compelling ICO pitch to raise funds from cryptocurrency investors. Below are five key questions that are at the top of the minds of crypto-investors that you should ask to get closer to the perfect ICO pitch.
Is your blockchain solution solving a real problem?
It’s no surprise that new blockchain companies are created every day for a chance to raise hundreds of millions of dollars. What this means is that there are a lot fewer legitimate projects that actually solve real-world problems.
Be clear as to why you’re building the blockchain application and also illustrate the magnitude of the problem to get buy-in from discerning investors.
Your pitch should also make clear that the solution is relevant to a problem that people are facing at this current moment versus something that people theorize to happen.
Ivan Poon, the CEO and founder of Switcheo Network, is an example of someone that is able to perfectly illustrate his idea and explain how his company fits into the marketplace by using real-world examples.
Are the economics of your token sound?
Let’s be honest. Most crypto-investors are usually interested in one thing – the value appreciation of the tokens that they purchase.
To allay doubts of a dud token investment, blockchain founders need to clearly articulate how their tokens are created, used and why they’ll grow in value over time.
More popular recently, blockchain companies running ICOs mint a finite amount of ‘utility tokens’ that can be spent or exchanged for service, rebates or goods. That way, tokens get destroyed after use and become more scarce.
The result? The token’s worth increases naturally due to scarcity.
Making a case for the longevity of your token value means illustrating what the circulation of the currency will look like, as well as highlighting scenarios for increasing demand, adoption and scarcity. Communicating how the tokens work in the grand scheme of things will greatly increase your chances of swaying investors.
Is your team the best for this project?
As with any company or solution, it’s the people and team behind it that make or break the project. Ask yourself these questions:
What are the technical strengths of my team?
Do the members have any notable achievements or associations?
Are their experiences relevant to the blockchain solution in development?
Cryptocurrency investors look for patterns related to these questions that can indicate the eventual success of a blockchain project. Similar to any investment, potential holders want to know that there are a good mix of competent people behind the product that can sell, build and continue to sustain the solution.
What are your plans after the ICO?
Some investors buy tokens to hold onto for dear life over long durations, rather than just selling immediately after the ICO is over in anticipation of value growth. As such, they’ll want to know exactly what founders plan to do in the months and years ahead.
Your roadmap should include:
- Marketing and growth plans
Investors want to see that you have a plan for marketing and growth before they decide to invest in your operation.
- Project Timeline
Having clear set dates (e.g. 2018 Q4) helps keep founders accountable for their promises made before the ICO and let holders closely track the progress of solution development. A simple linear illustration in these cases usually work best.
How will the ICO be financed and where will proceeds go?
This is perhaps the most important piece of information for any token investor – how the company will finance and distribute ICO proceeds.
Prospective investors need to know the factors to consider in their purchase. This means including the token price, whether there are hard caps and limits to the number of tokens and also how these will be distributed to their wallets.
There have been numerous blockchain companies raising millions and minting billions of tokens via ICOs only to either participate in fraudulent activities or never get any closer to realizing their solution idea.
Tackling this new world of cryptocurrency and blockchain can be confusing when you’re trying to get traction in the initial stages. However, as with any difficult endeavor, strategies that work leave patterns, and we can learn from these successes and apply it to our own projects.