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.

Cybersecurity is now a key part of business operations across all industries, especially so for Initial Coin Offerings (ICOs).  It has become a concern for ICOs because of recent, high profile hacks – in particular the loss of approximately $40 million worth of digital currency for the DAO, a decentralized venture capital firm built on the Ethereum network, that was hacked as a result of a security flaw. ICOs must maintain a high level of security which requires attention from anyone running an ICO. The initial reaction among many who learn of a hack is, “I thought the blockchain could not be hacked.” Hacking a well-established blockchain such as the Ethereum or Bitcoin network would still require a tremendous amount of computing power so it is virtually impossible. Instead hackers go after the point of weakness which is the entry points for transferring funds into and out of wallets and exchanges. For those running an ICO, it’s important to take specific steps to prevent scammers. For example, it’s important not to post to an ICO directly with tokens you hold on an exchange as this can easily be hacked.  Also, scammers spoof the ICO with similar looking web pages, and accounts.  Many ICOs today give very specific instructions on how to place tokens on the site for the ICO. One strategy is to take email addresses for those interested in funding the ICO and then when the pre-sale/crowdsale starts, provide funding instructions only to those who signed up.  By displaying the funding instructions on the website you invite hackers to attack your site.   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 developing your Initial Coin Offering (ICO), the marketing campaign in advance of the pre-sale or crowd-sale of the token is important for building awareness and growing the network of supporters. The key is to identify your target audience and post in the forums that reach that audience. The campaign should run at least two months as it takes that much time to get around to all the contacts and groups. There are several channels for your pre-sale campaign. Some channels reach a large number of supporters such as BitcoinTalk others are more targeted. These channels include: Classic PR – press releases that describe the upcoming launch of your token- you can use a press release service or send out the release directly yourself. It helps to create a compelling angle in the first paragraph. The PR campaign should start three months before the launch of the crowd-sale. Banner advertising – display ads for extensive reach on Google, Facebook, and more. This can generate more awareness of your ICO and drive some traffic to your site. Influential marketing – your best influencers are advisors to your ICO and their network of contacts.  Reach out to them to see how you can best leverage their network and contacts. Social media – Twitter, Facebook, LinkedIn are great sources to connect with those in the community. YouTube – an explainer video which shows off what your ICO product does can be very helpful in generating understanding and support. Bounty campaigns – referrals driving traffic to your site. A bounty program can activate your user base with incentives and drive referrals. Placements in blogs – posting in relevant blogs and websites. Find blogs that reach your target audience and use their influence to communicate your message. Viral media – If you want to get a community of supporters to get excited and share your message you need to give them a reason to. Competitions can generate a viral effect. Community marketing – posting in community blogs and podcasts. You’ll need to check to see if your chosen community allows for commercial marketing. Events – meet-ups, conferences etc. Events are a great way to do this but like all marketing is a balance between cost and return.     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.