Initial Coin Offering (ICO) is gaining popularity among startups because it enables companies to raise money faster and with less red tape so they can get started on building their businesses more rapidly.
FREMONT, CA: The initial coin offering, or ICO, is getting on another route for blockchain-based new companies to raise capital without experiencing the more laborious screening required by customary loan specialists or having the reputation needed for Initial public offerings (IPOs). Now the startups can raise money faster and with less red tape with a new type of crowdfunding. ICO will let new companies start on building their businesses more quickly.
According to the research paper, “Inventory, Speculators, and Initial Coin Offerings,” by Wharton professors Gerry Tsoukalas
and Serguei Netessine as well as doctoral candidate Jingxing (Rowena) Gan, attaining the initial coin offering design structure correct is a key ingredient for success. It is the first document to see initial coin offering plan for organizations creating physical items, under request uncertainty and within sight of key financial investors. After researching, they find that even the best designs have flaws.
ICOs come at the cost of lower production quantity, lower profit, and limited flexibility in terms of product margin. On the other hand, ICOs have the advantage of being a low-risk means of financing for firms.
How ICOs work?
Here is a step by step pattern of an ICO:
1. Pre-Announcement: This is the marketing level attended by cryptocurrency investors with the creators outlining the details of the work of a future project through sites. After the circulation of the white paper, the company gets a sense of whether there is investor interest in the project proposed or not. Then addressing issues and risks raised by would be investors to reach a final business model and a final version of the white paper.
2. Offering: It is the final form of the white paper, setting out the conditions of an agreement to help the investors, made for the benefit of the organization going into the ICO. This offer includes an outline of the project, the total amount of capital required, and project timelines. Once the offer has been sanctioned, the ICO initiating date is announced, and the marketing campaign moves into overdrive.
3. Marketing Strategy: Marketing campaigning has the ability to raise the necessary capital for the firm. It is one of the critical components of the ICO. The companies which are less famous and unknown bring marketing agencies to make the necessary presentations, etc. The buying and selling of the tokens starts with the company after having established an exchange for investors to acquire tokens when the marketing campaign comes to an end.
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Here are some ways of launching a successful ICO:
• Create a strong team
• Determine your goals precisely
• Test your project before starting
• Run a presale
• Prepare a pricing plan
• Prove your statements
• Activate all social media marketing channels
ICOs have become the most desired way for new companies and startups to raise funds through their blockchain projects. It is sure that the span of ICO and blockchain Technology will stay for a long time, due to many successful crypto currencies. There is no opposing that ICOs have gained the interest of many companies and people.