For some people tokens appear to be a brand new concept that they’ve never seen before. But in reality, we all have seen use cases for tokens. Frequent flyer miles is an example of tokenizing a network. Airlines came up with the frequent flyer program many years ago by giving “miles” to those who flew on their planes.  They offered miles or tokens to reward those who joined their network and used it. One can think of an airline as a network of services such as booking agents, baggage handlers, pilots, and more. For those who flew more often the airlines gave frequent flyer “tokens”. They did not give cash for flying. Why? Because the airline wants you to continue using their network for flying and not a competitors’ network. At some level, it locks you into their network. The frequent flyer program is just one example. There are many others such as cash back on credit card usage, loyalty points for department stores, that free tenth cup of coffee at the coffee shop and there are many more. The only difference with ICO tokens is that there are many more examples of how you can use tokens and keep track of them. Instead of using a punchcard every time you order a coffee, the usage is stored on the blockchain.    Just as frequent flyer miles are not a currency but rather a pseudo currency so tokens are the same—they represent value but not necessarily legal tender. Just like the tokens used in an ICO they are designed to encourage you to use a specific network.     Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

As the ICO industry starts to mature, we’re now seeing the end of the beginning. The regulators are rushing in shutting down the scams and raising the bar for entry. Today just the legal work for an ICO costs $100K+ for the Whitepaper and reviews of the website. ICOs are shifting into the domain of very well-funded startups and later stage firms. I receive calls from companies with substantial revenue and traction asking about ICOs as they want to skip the Venture Capital funding round because they can control the terms better. In addition to funding, some companies are considering the advantages that come with token-based networks.  It’s not only a new way to raise funding but it is also a new way to compensate employees and offers a  new revenue growth strategy. Some companies see potential benefits in paying employees in tokens rather than dollars as the tokens can appreciate through the growth of the network they are building. A dollar is only a dollar but a token can appreciate in value if the network it represents grows. YourNow recently raised $24M in an ICO sale. They shifted their revenue strategy from taking a transaction fee and then having to grow the user base to issuing tokens and then making the tokens more valuable by making the network more valuable – all  without having to substantially grow the user base. Other companies are looking at moving their technical platform to the blockchain as an alternative growth strategy. The blockchain offers clear benefits for those who adopt it. While very large companies may find it difficult to re-engineer their sites into a distributed network most growth companies can reposition their network to accommodate it. ICOs and blockchain technology bring more than just funding –they can provide a  growth strategy and a compensation tool as well.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

In the startup world, an entrepreneur could be building a platform, a point application or an add-on tool to other systems. So in the blockchain world, one could be building an entire digital ecosystem, a standalone application, or an add-on to another system. I see ICO candidates daily who want to mint their own coin and run their own ICO campaign.  In looking at their application I find some are building a digital ecosystem but many are building add-on tools or point applications. For those building a digital ecosystem it makes sense to run an ICO and launch a new token. For the others it makes more sense to work with an existing digital ecosystem or application platform and join their network. The Dot Com era imploded for many reasons but one was the fact that major infrastructure components were not yet built.  Those who raised funding in the 1990s often had to raise $5M or more to build a website because they were building their own server farms, coding user interfaces in HTML, and had to pay exorbitant rates for labor because the programmers were few and far between. One of the key issues to consider in your business proposal is the amount of infrastructure available and what resources your application needs. In the early days of the internet many applications were not easily built because the infrastructure was not yet available. If you want to build your own digital ecosystem and launch your own token then realize the challenge ahead of you with regards to the amount of infrastructure and support systems needed to make your system usable. I look at some ICOs that raised $50M and think they will need $500M to accomplish it because of the many layers of infrastructure that need to be built. In looking at your ICO ask yourself, do I need my own token? Can I use other digital ecosystems and their token?  Is the blockchain infrastructure available for my application?  How much will it cost to build the missing pieces? The Dot Com era came to a screeching close twenty years ago but the lessons still remain.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

Every day I receive questions from prospective entrepreneurs from both startup and  growth companies asking if they should run an ICO. I respond with two questions:     Does a blockchain-based system improve the product/service you offer?     How would a token improve the use and access of your product/service? With the first question we explore how blockchain provides greater security, audit trails, and for some applications a lower cost of operation as it encapsulates many of the supporting functions. We then discuss how this impacts the company’s product/service and if it would benefit from a blockchain implementation. The second question, delves into tokenomics. It’s the role of the token in the application. In the rush to raise ICO money many force the token on their system without regard to how it will be used. One can build the best system in the world but if users don’t want to use tokens to interact with it, it will go nowhere. It would be more prudent to find a token use case and then build a system around it. The discussion around token usage is sometimes referred to as Tokenomics and answers the following: How many tokens are generated and available? What is the value of a token? What does it cost to obtain a token? What do you do with leftover tokens from the raise? How many tokens does it cost to use your system? And the list goes on… Putting a token into the mix has the advantage of acting as a pseudo-currency through which you can incentivize other companies to build on top of your platform enhancing the performance and making it more robust. You can more easily charge users of your platform such as those who want the data coming out of it and not the product/service itself. Even more, you could add AI algorithms to the system and charge tokens for the answers it produces. I can even see tokenized systems of the future charging tokens for making a positive impact. For example, if the company’s platform generates more business through lead generation, the company receives a commission from the increased revenue of the company and not just the increased lead count. Tokens also can incentivize others to provide ancillary services through your platform. If you need additional functionality you don’t have to build it all yourself, you can attract partner companies to build around your system and earn tokens for the use of their add-on application. In short, building a digital ecosystem requires mechanisms to attract, incentivize, and compensate those who provide value. Tokens provide a seamless, non-invasive payment mechanism to achieve this. An ICO promotes the use of blockchain based applications with strong tokenomics behind it.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

The ICO continues to generate huge sums of funding now surpassing venture capital. In raising funding from the entire world, there will be costs to achieve the funds raised. ICOs are now splitting into two categories – those raising less than $25M and those raising more than $200M. Here’s a cost estimate with a range depending on the level of marketing, legal, and cybersecurity you pursue for your ICO raise. Whitepaper (core content must come from the company)- $10K to $20K. It takes approximately 200 hours to complete a whitepaper including reviews. Just about all content for your ICO comes from the whitepaper and is the core document investors, partners, and team will use so it’s the primary focus. Website $5k to $20K. You can generate a nice looking site for minimal dollars. If you translate into additional languages and want to ‘harden’ the site to withstand cyber attacks you will need to spend more. Also, you’ll need to own all versions of your  website name in all top-level domains, in all countries, including all ‘misspellings’ to ensure that someone doesn’t spoof your site. Token ERC 20  $10K to $20K  (to place on exchanges) –a  token economics paper is critical, just like a whitepaper it as important to spend time on this. Advisors  1% to 2% of equity. You will need a number of experienced advisors in the crypto space to drive credibility and they have to be engaged with the project. Smart Contract audit $10K to $50K. The Smart Contract will need to be designed, coded, and audited.  The complexity of the code and other factors determine the cost. Marketing $20K to $100K-$5K per month for the initial marketing and then $20K per month for 2-4 months leading up to pre-sale and through the crowd-sale. Most services have a minimum of 4 months commitment. Community Management $10K to $50K- This is for managing the Slack, Telegram, and other channels.  A customer service function is installed and run for the duration of the campaign with the majority of the activity during the pre sale and sale. Paid advertising- $5K/month  this is optional but can be helpful. For a six month campaign this totals $30K. Legal Fees $20K to $100K. The big name law firm will not take a client for less than $100k in billings for ICO work. Project management  $5K to $10K/month for 6 months – $30K to $60K.  Some take a percentage of the raise in tokens or equity. Total $125K to $430K depending on the level of service and how much you do yourself. This doesn’t include salaries, travel to meet investors at conferences, office space, etc. In addition, you’ll need banking services that accept cryptocurrency– $10K. International marketing adds another $25K to $100K onto it depending on travel and reach. Cyber security steps will add additional cost as well.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

As ICOs continue to increase in number and funds raised on an exponential scale, it’s interesting to step back and look at the ICOs from a business perspective. While the technology is fast coming up the curve improving on scalability (still a long ways to go), it’s the business models that appear to be trailing behind. There are many business model and use cases that need to be invented. Here is a list in no particular order: The Rarepepe and Cryptokitties show a new business model in which all assets can be digitized then traded, sold, or bought.  This could be applied to physical assets in addition to digital ones as I believe one day everything physical will have a digital representation for legal, financial, and other management. There’s a need for a “google” of the blockchain in which anything can be searched or queried on a blockchain. Most government functions (DMV, tax collections, utility services etc) could be done better and more cheaply with the blockchain. In fact, I predict that most government functions will end up on the blockchain sooner rather than later as a cost reduction move. A peer to peer network platform that can make blockchains with smart contracts seamless and easy to use. We need mechanisms to enforce what the smart contracts instruct. Instead of installing the blockchain and building a company around it, how about an existing company adopting blockchain as an enabling technology to increase security, improve functionality, or provide audit trails for search and transparency? Since there are so many business model and use cases that need to be invented, let’s not create yet another wallet, exchange, or trading platform.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

The Initial Coin Offering (ICO) is a new way of raising funding. Currently, it’s almost exclusively the domain of new startups. We’re now seeing existing companies use it for their next round of funding. The ICO brings with it the promise of high levels of funding as one is raising from across the world, not just the local region or the USA. The funding amount raised by startups with nothing more than a whitepaper has been staggering but those days are fast disappearing in the rear-view mirror. The SEC has entered the fray to stamp out the fraudsters and investors have become more demanding of ICOs. Today the ICO must have a Minimal Viable Product (MVP) to be taken seriously and truly compelling use case. From time to time I check back in on deals I saw running an ICO last summer. I estimate that one in five is no longer raising funding or is even in business. In some cases the website is gone and there’s no trace left of the ICO. In one case, I found and ICO that posted a shutdown notice saying they had received a letter from the SEC and they were giving the funds back. Evidently, the SEC gives notice to those ICOs it considers a security offering and indicates if the ICO gives the money back, then no charges will be filed. I suspect everyone takes that option as fighting the federal government is a hugely expensive endeavor. Today, I’m fielding calls from established companies with $1M of revenue or more asking about running an ICO instead of a venture raise on their next round. Companies with an existing ecosystem of customers, partners, and providers are well positioned to take advantage of the ICO as they need only had the blockchain technology and the token utility to create a new product with new applications in some cases. Established companies are less likely to commit fraud since they have a brand and a reputation to keep. They have a track record that investors can review and a management team in place that they can vet. The dynamics of the fundraise shift from following a venture capital funding profile to one of fostering a digital ecosystem or network with the support of current and future users. The ICO backer supports the company in return for tokens which can be applied to the use of the company’s digital ecosystem. It expands on the Kickstarter pre-ordering model by compensating those who help build out and run the system and encourages partnering and collaboration with those who can improve the strength of the network.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

After the ICO is completed one should wrap up with a program to close out the campaign and prepare for the ongoing development work. This typically includes the following: Convert enough of your crypto holdings into fiat currency to give yourself at least a two-year runway.   Setup to deliver regular reports to the investors and backers   Restructure the team for product development to reach product/market fit.   Update websites and online documents accordingly It’s often the case the advisors who helped you raise funding will not be the ones who can help you with product and market development. Be Sure to thank those who helped you and compensate those who were promised payments for bounties, advisory work, etc. Check with your attorney on any post campaign filings that need to be completed. You may want to issue a press release on the final results of the campaign and use it as momentum for recruiting team members, setting up customer contacts, and partner relationships.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.

In running an ICO, the presence of advisors on the team can help burnish the image of the project and increase the chance of success. Currently, many advisors are recruited based on their previous experience with an ICO. As the industry progresses this will become less important and skills related to launching and growing the business will return as the driving factor. Advisors need to bring additional skills and connections to the project as it’s a new space in which there is much to be discovered and learned. Advisors can fill in the gaps of the team. Aside from technical skills they can help with the fundraise by reaching out to their network to find investors. Some have a background in the blockchain world and can help bring credibility to the team. Others have experience with ICOs and fundraising and can help with strategy. Advisors should believe in your project and be able to add value.There’s no magic number of advisors although one typically compensates them so some thought needs to go into how to do so. A typical compensation plan is a small percent of tokens generated from the crowd-sale.   Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more.  Connect with him about fundraising, business growth, and emerging technologies.     If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information.  The first 3 companies are free for 6 months. Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now! If you have any questions, please contact us at info@tencapital.group.