Is An Initial Coin Offering A Suitable Strategy For Your Startup?

#1 What is your startup about?

In any startup, you have to consider your target market, but there is something else you need to think about when raising funds through an ICO.

You should think about how much an average person from your target market knows about blockchain technology and cryptocurrencies. If your plan is to open an elderly care center, it is unlikely your future customers will understand what an ICO is. If your customers don’t understand what one is, it is unlikely they will invest. On the other hand, you might plan to open up a restaurant where people will be able to pay in cryptocurrencies. In this case, your target market will consist mostly of people who already own cryptocurrencies and who understand how ICOs work and are open to investing in them.

If you are not sure, carry out some research. As a starting point, you can check statistics of ICO distribution by country, industry, year and blockchain at ICOWatchList.

#2 Where will your business be located?

It is important to check the legal status of ICOs in the country where your business will be based. For example, there is a ban on trading and holding crypto in Egypt. You may try to create an ICO located elsewhere, but if the goal of your startup is to operate in a country where cryptocurrencies are banned, it is unlikely you will gather enough support for your startup to succeed. You can check the basic legal status of cryptocurrencies in different countries in this article.

#3 What will your token represent?

So, now you have discovered that your target market understands and likes crypto and that it is legal for you to start an ICO in your target country. The next step is to decide what your token will represent. The success of your ICO will depend on the sales of your token. If it is useless or inconvenient, nobody will buy it. Don’t stop at just making it useful. Be creative, make it interesting and intrigue people. It is hard to imagine a startup that can’t integrate a token into their future plan. The existence of a coin used exclusively to reward Burger King customers in Russia for buying a Whopper sandwich builds a strong case for this point.

Once you have decided what your tokens will be used for and how they will work, one question still remains.

#4 Which blockchain will your project be based on?

There are new blockchains emerging on a daily basis. Will you base your startup on an existing blockchain or build a new one from scratch? You need to think of your startup requirements and what your team is capable of. What level of knowledge does your team have about blockchain technology? Are they capable of building a blockchain from scratch? If not, do you have the funding to hire an expert, or a team of experts, who can handle that for you? If you don’t, there is still a great possibility that your startup is interesting to an expert who might be willing to do the work in exchange for tokens.

The token’s value is generated from people believing that it has value. If people believe in the success of your project before you even start your ICO, you are good to go and there is a lessened fear of failure.

Conclusion

Launching an ICO is not a suitable strategy for every startup, but it can be for most of them. If you don’t face major issues, such as uninterested markets and legal problems, it all depends on your creativity and diligence. Don’t forget to carry out detailed research and create an intriguing and useful token, as well as a detailed, compelling and informative white paper.

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