The mercurial rise in popularity for the ICO fund-raising model has created a lot of buzz among many industry observers and evangelists. In fact, data indicates that ICOs have surpassed venture capital funding as a means of raising cash. Blockchain companies collected $327 million from ICOs during the first half of 2017. By comparison, VC funding accounted for only $295 million during the same period.
One reason for this is that the liquidity offered by the crypto market means profits can be realized much faster with a blockchain-based company. Moreover, receiving tokens instead of shares means VCs have an asset they can easily unload should their investment under-perform. This easy mechanism also means that VCs have some level of protection against sharp drops in cryptocurrency valuations and volatility. Equity rarely sees the massive shifts in price tokens and cryptocurrencies presently exhibit, something VCs are loath to absorb into their funds.
Having a mechanism that allows them to cash out before a downturn makes a more appealing investment opportunity.
On the other hand, apart from skipping the application process for VC funding and time-consuming due diligence, a reason why initial coin offerings (ICOs) are an entrepreneur’s new first choice is that they are much more democratic and inclusive allowing many to invest small sums instead of a few acting as large shareholders. In turn, this gives the start-up’s management more freedom.
An Initial Coin Offering (ICO) is a form of financing in which a legal entity or group of individuals offer blockchain-based tokens (or coins) to members of the public. The act of generating and offering tokens to the public is also referred to as a crowd-sale or token sale. The tokens generated rely on blockchain data structures and cryptography as a means of securing transactions and controlling the creation of additional units. The supply of tokens is usually scarce, enabling them to act as a medium of exchange, unit of account and/or store of value.
ICOs are inherently technical, so companies gain access to more technically sophisticated investors. Using tokens as equity can be a way to crowdsource new customers and users, and create new business models. These crypto-investors actively participate in growing the product market, much as customers in the past referred.
There is no arguing that start-ups face an uphill battle to get noticed in a space where hundreds of ICOs run at the same time. As a result, most start-ups normally turn to roadshows in a bid to market their ICOs. A roadshow is an intense and effective way to rapidly gain exposure and link with local partners to gain credibility through network effect.
So getting some solid advice from experts who have spent time in the marketing trenches is critical. ICO SERVICE comprises a team of experts with insights about conducting a proper ICO roadshow. Here’s a look at how to get the best from an ICO roadshow.
Knowing your community is very crucial when it comes to roadshows. Take the time to know a bit about each country and it’s communities you will be speaking to. Consider the following factors:
With this information at hand, you should be able to tailor your speech so as to appeal to each community. KYC can even boil down to minor details, for instance, when you consider Asia Roadshows in particular where language barriers and customs can pose a challenge.
You need to understand that roadshows are fast, far and often costly. Do not get stuck wasting time, organizing transportation, creating community buzz before arrival to next location while also trying to squeeze meetings, etc. At ICO SERVICE, we do the majority of this leg work for our start-ups. We organize your meetings with investors by working with our local partners. We introduce our customers to the investors. We also help to find the flights, hotel and meet you at the meeting points. The team and its local partners even schedule dinners & meetings with investors. So whether you are working with an accelerator like ICO SERVICE or organizing on your own, to make the most, use local partners and have a team member with you to split the small details of travel and organization while the other manages meetings.
In regards to knowing which networking platforms to leverage, you should know that each location and event will be different from the last. As a result, you will have to make the most of every moment with some key prep work. For instance, if you are headed to China, it is rather obvious that you should have a WeChat account set in place perhaps even rather than business cards.
From a perspective of communicating the project goals, it is imperative to have a whitepaper and a roadmap prepared before the launch of an ICO. The whitepaper must clearly outline the technical aspects of the product, the problems it intends to solve, and how it is going to solve them. Likewise, the roadmap should list clearly defined and realistically achievable goals and their timeframes. Remember that this is crowdfunding 2.0 and that you’re not only pitching to VC’s. You may be speaking in front of an audience of 20 or 2,000 individual crypto investors, so make sure your whitepaper, roadmap and the pitch for your roadshow speaks out to crypto investors.
Every investor wants to see returns but in blockchain specifically, investors want to see problems being solve and why your project requires blockchain to function. Most audiences would ask:
This should be incorporated in your pitch without the need for question. A start-up promoting its ICO should clearly state in its pitch that the product is directly linked to blockchain technology and that it cannot be substituted by a non-blockchain system, e.g. a simple database. For example, the value of ETH, the tokens released during the Ethereum ICO, is secure because they are required to run DApps in the network.
If, on the other hand, the only use for coins in being bought and sold on an exchange, it practically guarantees that their price will crash very soon after the end of the ICO.
As such the roadshow is unlikely to meet the expectations of discerning users in the first place. There is no arguing that any digital token released during an ICO will come under massive speculative pressure as soon as it hits the markets. The only thing which can counteract that and prevent the token from ending up as a gimmick is an equivalent demand for it; and that demand can only be produced by real utility.
The practical experience of many successful ICO roadshows shows that the team, the goals, and the protection of investors’ interests are the three topics which tend to interest the audience the most. Therefore, they need to be decided and articulated clearly to the audience before the start of an ICO roadshow. From an investors’ standpoint, a great team behind the project is one of the most important factors when deciding on contributing to an ICO. Conversely, an unproven or worse still, an anonymous team is likely to cause investors’ confidence to plummet and stop them from investing.
Also remember that an ICO roadshow takes a lot of time and work. You’re a start-up and chances are with a small amount of people and an overwhelming amount of work to do. The point is you will need proper preparation for your roadshows. If you have an incredible project but no one understood you, your message or the central need for your token, they will not invest. ICOs are not free money and introductions will only open the doors, it’s up to you to sell the tokens.
If you are organizing your own roadshow, remember to research thoroughly as blockchain conferences have become a big business. There have been cases of large scale conferences with equally large fees but it’s turned out to be start-ups pitching to an audience of start-ups or sometimes instances of attendees not in fact being would be investors but people incentivized to show up.
When it comes to properly allocating your tour resources wisely, you should not undervalue meetups and overvalue conferences. You are doing an ICO and focusing on future token users not speculators- otherwise you would be doing an IPO. Normally, these are the investors linked to tight, loyal communities that attend Meetups dedicated to the space. The idea here is that some conferences are best to skip and focus on smaller scale Meetups while other locations and conferences are imperative to be seen at. So before shelling out the hefty fees to participate, be sure it’s worth the money.
Across every industry – from supply chains to energy, insurance and education – there is a drive to move away from siloed digital infrastructure to collaboration on distributed ledgers. That’s why the ICO model makes sense and while there is some irrational exuberance attached to this new model, it is a revolutionary technology that will create a paradigm shift. It’s clear, a model of businesses offering services to consumers in a one-way transaction is simply not going to last. In its place, a market sitting on a protocol-driven, open platform with many stakeholders, none of whom overly control or monetise the system will develop.
The bottom line is that today’s developments and the rise of ICOs is the start of a transformation and this calls for proper ICO campaigns and roadshows. A proper roadshow will boost your project and unite a network with links to investment, future partners and blockchain enthusiasts as potential community marketers. Take your time in research and make the most of those road shows!