Initial Coin Offerings (ICOs) have gained a lot of ground in the last years but they are still a relatively new phenomenon. The topic of ICOs can be confusing since a lot of people still don’t know what it is or how it can benefit their specific business interests.

For starters, ICO is an acronym for Initial Coin Offering and it’s basically a method of fundraising through which new projects can gain capital to launch new cryptocurrency. This method has been proven to be successful, as there are companies who have raised millions of dollars in a matter of minutes.

Instead of requiring help from banks or investors to receive funding, a company sells tokens to its customers. This way, buyers are directly interested in the company’s products and success on the market. If the demand increases, so does the value of the token.

How do ICOs work?

The process is pretty simple. First you come up with a project that you develop until it reaches a technical milestone. The next step is to announce that your company is planning to have a token sale. This step is important because the public gets to see the story of the project, its goals and its symbolic promises.

Once you publish your white paper, people can discuss your project and see if it’s worth investing in. The tokens offered are basically a way in which customers can prepay for a product or service and they are usually acquired via cryptocurrency.

ICOs are rapidly becoming a global industry, thus many companies are showing more and more interest in this method of funding. There are dozens of them launched every week, prompting most investors to look for differentiating criteria to determine which ones have the highest chance of success.

So how do you ensure your success using ICOs?

Basically anyone can start an ICO as long as they have the necessary tech for the project. From here on out, anyone is free to try to get their cryptoccurency funded. You can also use free platforms to create the website you’ll need for your project.

You can promote your new cryptoccurency via Wordpress, one of the most popular solutions from creating websites from scratch; you can even pick a personalized cryptoccurency Wordpress theme.

In order to be successful, you have to first be aware of the risks and soothe the investors’ concerns. There are no regulations when it comes to ICOs, which means that there are also a lot of scams, a lot of people who can make others believe their idea is great, receive funding and then simply not deliver.

So, to ensure your success, you have to first establish your credibility among your target audiences, you need a good business plan to make people want to invest in your cryptoccurency idea because it has the potential to grow. Not just that, but you have to have adequate financial resources to even start, so don’t lose track of budgeting — it may cost up to $60.000 to launch an ICO.

Next step is to have a killer white paper — it’s a document that will basically set you apart from the competition. It outlines the prospects of your cryptoccurency and details about the idea and the means through which you’ll turn it into something successful. You want your white paper to be informational and very thorough; it has to outline your project down to the last detail.

You not only have to clarify the project and its goals, as well as the details about the working team, but also manage to be persuasive, to clarify what’s in it for the contributors.

They are interested to know all there is to know about the team (their experience, qualifications, level of expertise etc.), they want to know the goals of the project (through this investors will know if your project is a viable option, if it has chances to succeed) as well as how and if their interests are protected. Anyone who gives money towards something wants to know where that money will go, who will handle it and how and what their return of investment will be.

So, with that in mind, if you want your ICO to be successful and gain a good reputation, hire competent people and include as many information as you can about them — anonymous teams will automatically raise red flags.

The last step is to make sure your project gets adequate promotion through social media and then establish the pricing for the tokens you’ll offer, as well as the distribution (local, international etc.).

Also, as general precautions, be careful with the way you invest your money before and after setting up your ICO and always have backup systems in case you ever run out of funds.

ICOs are a very new way of raising money, so while the chances of success can be big, so are the risks.

An ICO startup isn’t an easy process — you have to be informed, invest wisely in development, management and marketing and come up with a killer idea that is worth investing in — ask yourself if YOU would invest in your idea if the chance presented itself.

If the answer is yes, you’re on the right path. Good luck!