One of the reasons why ICOs have become so popular is that they allow you to raise large sums of money from many investors making tiny contributions. It also gives founders the ability to not leverage any equity in their company from the start. However, the ICO space has become too competitive for this strategy to be effective. It is now important to get backing from institutional investors if you want to raise significant money. Here are some tips on how to get institutional investors interested in your project.
Develop a Demonstration Product
One solution to get institutional investors interested is to launch a scaled-down solution to the project you plan to launch. This will allow you to get reliable feedback from users who might eventually use your product. You could launch a demonstration project and present it to potential investors you plan to target. With institutional investors having experience and skin in the game, they will be able to give feedback on the strengths and weaknesses of your planned project. This can be more valuable to you opposed to just selling your ICO to newbies, who could even be first time investors.. This approach will help your idea scale and potentially become more valuable long term.
You have to be Transparent about How You Will Use the Funds
An ICO is essentially a way to get direct investment into your project by selling cryptocurrency. It is important that you have a detailed plan in regards to deploying investor funds. This includes launching detailed infographics and charts showing how the funds will be allocated. The more details you can provide about how the funds will be used, the more likely it is investors will be willing to hand over their money.
One way to do this is to publish the code for the project on GitHub. This will allow the investors to go through the code for the crypto coin as well as any smart contracts you plan to use. The investors can check out the code for themselves and determine if it is the real deal.
Partner with Reputable Brands
If your project is viable, you can reach out to major companies that might have a blockchain innovation hub or other companies that you believe could add value to your firm. A simple brand endorsement can greatly improve the chances of getting the funding you need form institutional investors.
Attend crypto Events and Talk to Potential Investors
In-persons meetings are one of the most effective ways to attract funding for your ICO. Attend as many blockchain events as you can and book a booth at these events. Distribute brochures and talk to representatives from major funds that are present. Sometimes, an easy conversation with an investor can go a lot farther than you think.
Use Social Media and Reach Out to Investors
Influencers in the crypto space are a great way to be noticed by institutional investors. It is important to use the right strategy when reaching out to them. Not only will they spread the word about your project, but most of them will also invest in the project. It is also important to have a solid strategy for your social media accounts. This way, potential investors can easily find out information about the project.
The Fall Of Initial Coin Offerings
Going through an ICO is not as popular as it used to be. The reason for this comes down to regulatory framework. You really have to make sure your working with a legal team to insure your offering is not considered a “security offering.” Many projects have now been challenged by the SEC and forced to pay large fines. The law can get quite complicated, and a lot of people started to understand that once all these ICOs were gaining scrutiny. When the ICO craze hit the market, it was all fun and games for a while. Eventually as time progressed, the market understood that a majority of these ICOs were scams. Many sources now claim that up to 80-90% of ICOs were scams. If we go back to a recent article by VF, it was also stated that “According to Welford, “of 2,500 projects since 2017, only about 45% successfully raised money.” Welford also stated that “only 15% of tokens issued in successful ICOs are currently trading at or above their original price. This simply means that a majority of ICO investors have lost money since inception.
Raising ICOs is still occurring, but you best understand that investors are being more diligent before allocating capital. This obviously has pros and cons, but at the end of the day it’s helping the cryptocurrency environment mature. If you don’t cut corners and follow the correct protocol, theres still many investors out there that will consider the partnership.
Image Source: Flickr