If you have outlined an idea and trying to develop your startup by executing it, the biggest challenge is to get appropriate funding. A new trend in Blockchain called ICO (initial coin offering) is a new effective way that allows companies to pre-sell access to their services as a method to gather the fund and expedite the development of those services.

Raising Funds through ICOs

In an ICO campaign, companies create a token (for more info, read ICO token development) that enables the holder to access products, subscriptions, and services from the new startup.

The ICO enables startups to sell those tokens before they launch their company, as a means of fundraising. It lays the foundation for companies to gather large amounts of seed capital from investors, therefore, democratizing startup funding.

ICO can prove to be an effective way to collect capital for your business idea. However, it involves a few things that need to be taken into consideration for success, such as community building, foresight about regulatory compliance, and technical expertise. If you’re ready to take on these challenges, the payoff can be quite inspiring. Not just in gathering capital, but also in creating an effective community of supporters around your business idea.

Disclosure: Oodles Blockchain is a blockchain development company with excellence in developing and launching ICO campaigns for startups. We think that ICOs are racing ahead of VC Fundings and is an efficient model for the initial stage of fundraising. Also, we believe that ICO campaigns could not serve every sort of business. In this article, you’ll get an understanding of whether raising funds through ICOs is right for your business or not.

Raising funds through ICOs. How do an ICO works?

ICO can be referred to as a type of crowdsale. In an ICO campaign, a startup creates digital tokens to incentivize its participants in a crowdsale, in return for cryptocurrencies like Ethereum or Bitcoin.

So, once your startup hits its fundraising objective, the distribution of tokens gets automatically executed to the participants in the sale. If in case, the company fails to achieve its goal, the participants get back their funds back.

A) Ensuring Usability:

The aim of the newly created tokens depends on the type of the startup that runs an ICO.

However, these tokens must have some utility within the new startup.

Further, the participants should be able to utilize these tokens for buying products, gain access to services, or otherwise transact with the startup; these token are not the shares of the company. Crowdsale participants can’t be called equity partners in the new company, but investors.

ICO campaigns are developed and run on the blockchain. Blockchain technology ensures the security of digital tokens, prevent forgery and double spending. While still in infancy, raising funds through ICOs has become a trend in the recent time. In 2017, ICO campaigns gathered more funds for startups than VC Fundings.

b) Exchange of tokens:

When the ICO gets ended, most companies prefer to list their newly created tokens on a few cryptocurrency exchanges. Thus, enabling more and more users to exchange their token received during the ICO campaign. Also, it helps create a demand for your developed product.

Read more about Cryptocurrency Exchanges and how to develop them.

If your ICO has a reserve of tokens allocated especially for development, listing your tokens on exchanges could make them more worthy. So, not every company requires raising funds through ICOs. But for those companies where it seems feasible, launching an ICO campaign is one of the most eminent ways of getting

Setting out to raising funds through ICOs

Launching an ICO campaign require foresight and due diligence. Firstly, you’ll need to outline your timeline and roadmap for your new startup. Further, you’ll be required to provide the details of your company and its services and products. These details will be consolidated in a white paper to be reviewed by the participants in the crowdsale.

ICO marketing is another phase that plays a crucial role in the success of a campaign. You’ll also need to think about advertising and PR to advertise your name out there in the world in such a crowded ICO market.

To begin with, you need to hire a blockchain develope who has expertise in creating ICOs. However, if you choose a blockchain development company offering comprehensive blockchain development services including whole ICO process; Drafting of WhitePaper, Planning and Strategy, Best Marketing Solutions, Coin Development, etc. As well as token listing on exchanges.

The Bottom Line

ICO lays the foundation for launching bold ideas. Some Blockchain based ICO projects have even raised millions of dollars in 2017. ICO is an effective way as it helps to build a strong foundation for future development. And, along with the funding comes an active community of individual investors.

So, not every company requires raising funds through ICOs. But for those companies where it seems feasible, launching an ICO campaign is one of the most eminent ways of getting fundings for your new startup or business.