If you are looking to start your own blockchain project, or, have already started one and you are exploring your options for fundraising, you may be considering an Initial Exchange Offering (IEO) rather than an Initial Coin Offering (ICO). Why is this? Currently, the popularity of ICOs is starting to decline due to previous and recent instances of fraud stemming from the offerings since 2017 and many would-be cryptocurrency investors are not as willing to put their money into an ICO.
Following the recent decline of ICOs, alternative methods of raising funds such as Security Token Offerings (STOs) and IEOs have been gaining traction in the cryptocurrency community, due to the fact that they both provide more protection to potential investors who are reluctant to invest in ICOs.
If you are reading this article, then it is likely that you do not have any previous experience in launching an ICO, and you are looking for guidance on how to launch an IEO successfully. Thankfully, we will be able to show you how to do just that and in fact, it may be a simpler process than launching an ICO in the first place.
What is an IEO?
An IEO is a method of crowdfunding that is achieved by utilizing either one or, multiple cryptocurrency exchanges to facilitate the actual sale itself. The exchanges themselves will actually plan the launch event, create the smart-contract functionality, and handle all of the marketing tactics that will be deployed during the sale. As a result of this, to have someone invest in your IEO, they will need to create an account with the hosting exchange.
Furthermore, in contrast to ICOs, whereby the participating parties will transfer their funds to the smart-contract, the participants will transfer their funds to the hosting exchange(s). The first ever IEO launchpad was created in 2017 by Binance, which is the largest on the market. Since then, they have increased in popularity and a large number of cryptocurrency exchanges have created their own launchpad services to entice investors to go through them.
There are a large number of advantages in launching an IEO as opposed to launching an ICO. Firstly, any transactions made during the IEO will be secured due to the fact that the hosting exchange(s) will have their own secure methods of taking payments, which makes it easier for investors to have trust in the IEO project. Also, you will not need to heavily focus on your marketing efforts when launching the sale, as the exchange will likely have a large number of users who will be interested in your project and the exchange will handle the marketing to drive users to your sale. Finally, another advantage of launching through an IEO is that investors will reasonably know that your project is not a scam due to the fact that the exchanges review the legitimacy of IEO projects before listing them.
Ensure You Have a Product Demo
Similarly to private equity companies when businesses are attempting to gain capital funding, investors are likely to want to see a proof of concept or a functional demonstration of your products and services to ensure that they will be investing into a solid project. Having an effective and functional prototype available will help to generate trust amongst your investment candidates and will make them more likely to sink their money into your project.
Cryptocurrency exchanges are also likely to ask you if you have a functional version of your products and services before they agree to host your IEO on their platform. They are less likely to take a chance on a project that has no proof of concept or demo, as the investors are also less likely to part with their money. This could cause any potential IEO to go badly, which would reflect poorly on the exchange launchpad.
As a result of this, having a reliable product demo prepared is incredibly important. If you don’t have a demo available but are still needing to raise funds in the immediate term, you should be able to provide a detailed and encouraging progress report that highlights the current development stage of your product. Sometimes, this may be enough to convince both the exchanges and investors to buy into your project.
Make Sure You Have an Effective Team
One of the items in which you might be assessed when being looked at potential investors and cryptocurrency exchanges is the experience and expertise of your internal management team and your team of advisors. As a result of this, it is advisable that when deciding on who you have hired for your key management positions and your external advisors, that you should consider the candidates with the most experience and the biggest track records of success. This may seem obvious, however, some projects will sacrifice a quality team in return for a cheaper wage budget.
When recruiting for your external advisors, you should attempt to enlist expert legal advisors, from several corners of the globe, so that your project’s legal team have the relevant knowledge on legislation and regulations for all of the different countries that your project might be operating in. Furthermore, you should hire foreign business and technical advisors for your project, so that you have a varied skillset amongst your team.
If you do this, potential investors and the cryptocurrency exchanges themselves will be confident that your project will be able to weather any legal challenges that may occur and that you will have a large amount of commercial experience to lead your project to financial success.
Create an Extensive Whitepaper
A key document that you will need to present to investors and the cryptocurrency exchanges that you are hoping to be hosted on is your company whitepaper. You, as the owner of your project and your closest advisors should be the ones who actually write the content of the whitepaper, however, it would be foolish not to send your whitepaper to your other advisors, such as the legal and business team to make sure that every point in the document is up to scratch. They will be able to correct certain errors and make sure that the spelling and grammar of the document are up to scratch.
These are some of the items that must be included in your whitepaper:-
- How Your Tokenomics Will Work
- The Financial Model Chosen for your Blockchain Project
- Description of your Product
- Use Cases of Your Product and General Usefulness
- Who Your Product Will Be Marketed To
- Information on Your Competitors
- Information on Your Team and External Advisors
- Any Partners You Are Working With
Having a well-written and well-argued whitepaper will really help you to attract investors and it will also likely give you a greater pool of cryptocurrency exchange launchpads to choose from when you finally go through with your IEO.
Ensure Your Funding Goal is Known
When deciding on how many tokens will be issued during your sale, it is imperative that you generate a clear funding goal for the sale. You should also make sure that you make information on the maximum amount of funding you will be seeking to raise completely clear. Doing this will show investors that you have clear objectives that you will use the raised funds to fulfill. Furthermore, it shows investors that your goals are fixed and are attainable.
It is recommended that the ideal maximum funding goal be anywhere between $6 Million and $7 Million for your IEO. Although, this is only a guideline and you should tailor your funding goal to the amount that you will need to adequately further your business objectives.
Market Your Project Prior to Talking to Exchanges
Despite the fact that the cryptocurrency exchange launchpads help to market your project by themselves, it is still advised that you take extensive steps to market your project through various means. The reason for this is because competition for places on cryptocurrency exchange launchpads is fierce, due to the limited number of places available. As a direct consequence of this, exchanges are not likely to accept a project that has a very limited online presence and alternatively, if your project has a large amount of coverage and you have shown that you have extensive knowledge and value to the crypto community, exchanges will be likely to take you on.
There are a couple of methods for marketing your blockchain project prior to an IEO, these are below:-
Utilizing PR is an incredibly effective method of not only marketing yourself but also marketing your project to the crypto community. This is because by using PR, you will be able to demonstrate your wealth of knowledge and your general expertise to the market. As a result of this, potential investors are more likely to look upon your project in a favorable manner.
One of the most effective and tested methods of generating positive PR is by creating guest posts on a number of the most popular cryptocurrency news websites. Bear in mind that the posts that you write don’t have to be related to your cryptocurrency project, just be sure that you spread quality content across the community, that appears knowledgeable.
Having a large amount of content out in the crypto sphere that is getting good engagement will help to get your project picked up by an exchange in the future. It should be noted that different websites
Some examples of websites that allow guest posting are below:-
Social Media Marketing
One of the more cost-free methods of marketing yourself and your blockchain project is by making use of various social media platforms. These platforms generally have masses of different users, opening up a lot of different avenues for you to generate traffic to your platform.
Some of the best social media platforms for finding fellow cryptocurrency enthusiasts are:-
It is recommended that you start marketing through social media as long as possible before you get into talks with an exchange. To do this, you can start by posting updates related to the development of your platform. This will keep your community interested in the long-term and will also seek to drive new members to your community.
Sometimes, you may catch the eye of influential members of the crypto community. If this is the case and you are posting good content, they may share information relating to your project, bringing more exposure and helping your case to be listed on the exchange platform.
One of the best ways to get involved in the actual community is to get in topical discussions which are going around the community. It is recommended that when you get involved in these discussions, you always reference your opinions and post irrefutable information, this helps to add incredible value to discussions. If people view you as genuinely intelligent and experienced, they will be much more likely to be interested in your IEO later on.
Find The Right Exchange For Your IEO
Finally, the last thing that you will need to consider when launching your IEO, is which exchange(s) you will pursue to try and get hosted. Of course, one of the first things to consider is how large the exchange’s user base is, the larger the user base, the more the likelihood of you fulfilling your funding goals.
The next thing to think about is choosing the exchange that is going to the most cooperative with you and is the most committed to helping you achieve your goals. You will be able to assess this by having discussions with the exchanges and using your intuition to differentiate between the bad and the good ones.
Finally, you will want to choose an exchange that has a very good reputation in the cryptocurrency community. This will require you to do some of your own research and scouting the news to see if there are any instances of your favored exchanges falling into controversy. If an exchange is having trouble with its user base, this means that there will be fewer people willing to invest in your IEO because they do not trust the exchange anymore. This is something that should be avoided at all costs.
To help you get started, please make use of the below list of exchange launchpads.
Once you have implemented all of the above steps, you should be ready to take your cryptocurrency projects to an exchange for a listing. One thing to remember is that you might not always get listed on your preferred exchange and nothing is guaranteed. However, if you don’t get listed by your preferred exchange, do not give up, go for your next option and keep going until you eventually get listed.
Once you have the funds, you will be able to completely turn your project from a dream to a reality.