Instead you present a plan for a new cryptocurrency, and in exchange for bitcoin or ether, you give investors your new currency. The hope being that the new currency will be in higher circulation now and increase its value. The investors make money off your new currency increasing in value and you're business is now funded.
That's the plan, anyway. And the blockchain investment tool to raise over $3.7 billion over the last year. These staggering numbers have implications for the startup world - namely that there's a huge opportunity (albeit, potentially fleeting) for them to raise money and bring their ideas to fruition.
However, the trend hasn't gone unnoticed, leading to an overwhelming number of ICOs on the market looking to raise millions in seconds instead of going to banks or VC firms. When faced with so much competition, then, what's the best way of marketing your ICO? How do you succeed in making yours stand out from the crowd?
1. Know Your Worth
In order to best understand the current climate surrounding cryptocurrency, listen to what other investors are saying about it. Turn to trustworthy peer to peer forums like Bitcoin Forum and the CoinFund Slack channel for objective financial information on cryptos. Forums such as this are a great way to get a grasp of what your ICO is worth.
ICOs show realistic demand for their token through the details that specify the token economics--the supply and what will drive demand, are crucial. This needs to be clearly articulated in all of an ICO's marketing tactics.
2. Show That You're Accountable to Investors
One of the biggest marketing challenges for ICOs is proving to investors that their startup isn't going to fall flat after the raise. With Ethereum founder, Vitalik Buterin, predicting that 90 percent of ICOs will fail, and concerning headlines about ICOs being big targets for hackers, showing that you're accountable to investors is essential.
Descrow has emerged as the standard site for listing an ICO and mitigating risk. Their site has strict guidelines. This includes meeting milestones, frequent reporting and using smart contracts. Crypto industry approval by sites like these inspires confidence in investors.
You should also ensure that your potential backers are left with no doubts about what your project is aiming to achieve. Not everyone is comfortable with blockchain technical talk, so make sure that your marketing materials and message are clear.
AgreCoin ties their use of blockchain technology to resolving the agave crisis that threatens the billion-dollar tequila market in the US. That's the kind of positioning, marketing and appeal you'll need to use.
3. Make Sure You're on ICO Directories
Having a great idea is only half the battle. If investors have difficulty finding your ICO, you could find yourself all dressed up with nowhere to go. So, make sure you get the word out and appear on all the major ICO directories. There are many resources available for finding the right ones. Bitcointalk and Coinist.io are good places to start.
4. Have a Solid Business Plan and Strong Team
Last, but most definitely not least, you'll need a solid business plan and strong management team in place to make your ICO a success. Having a white paper and a stack of press clippings is one thing, but savvy investors look beyond the media hype and even your business plan to ensure you have a balanced team at the helm.
Ideas and passion are imperative, but investors rarely invest in ideas alone, so you'll need to prove you have the staying power to see it through. This means a management team with the right mix of leadership skills, technical abilities, financial knowhow and sales acumen. If your ICO's team fails to impress, it will be less attractive to investors.
Cutting through the competition is always a challenge. But if you follow these best practices when it comes to marketing your ICO, you'll be in great position.
And finally, don't let all of this information overwhelm you if you're not up on cryptocurrency. I'm not a cryptocurrency expert but I know startups and can recognize an interesting funding source when I see one.