Initial coin offerings, or ICOs, are an extremely successful and popular method of generating startup capital through the process of tokenization. This method allows innovative startups to avoid traditional venture capital funding methods and bring unique, disruptive products and platforms directly to the industries they target.
The massive amount of growth that the blockchain sector is experiencing is creating a massive amount of innovation, allowing innovators to devise new ways to bring blockchain technology to the world. Launching a successful ICO, however, is not easy. There are a number of factors to consider when beginning a tokenization project.
One of the main drivers behind the rapid increase in popularity of tokenization is the extreme convenience it delivers in both quantifying assets and managing them, regardless of the product. When assets become tokenized on the blockchain, they become extremely easy to track and trace. Tokenization makes it easy for new startups and business to administrate.
One specific area in which tokenization has been extremely disruptive is crowdfunding. Token sales, or initial coin offerings, have become the most popular application of tokenization, allowing new startups to raise an extremely large amount of capital fast. This ease of use is primarily due to the lack of regulation surrounding initial coin offerings, and the international nature of most ICO platforms.
There are currently thousands of different initial coin offerings active in the blockchain environment today, with new ICOs launching every day. Some ICOs have generated hundreds of millions in capital in a matter of minutes, while others have struggled. The main difference between successful unsuccessful token sales is the quality of the initial coin offering itself.
The Most Important Factors to Consider When Launching an ICO
The most important element of any initial coin offering is a powerful idea, preferably in the form of a working product. For some projects, however, a proof of concept is enough, which is typically presented in the form of a white paper.
The second most important element of any ICO is the team driving it. The team should be publicly visible, and be supported by a good marketing team and a generous starting budget. These two factors are one of the most reasons less successful ICOs fail.
Aside from the above two factors, it’s also possible that many ICOs fail simply because there is no market or need for their product. Even with the perfect development and marketing team, a poorly designed product with no market will fail to achieve success.
Existing Blockchain Services
The blockchain ecosystem has spawned a number of PR and marketing firms that specialize in blockchain technology and initial coin offerings. Some of these platforms, such as Token Market, ICO Box, and Waves take this concept a step further, offering startups a complete startup package.
The development of these platforms is creating a wide range of opportunities for new startups, removing the barriers to entry that prevent many disruptive concepts from entering the marketplace and thus fostering greater levels of innovation in future.