Your Guide To Running An Initial Coin Offering, For Better Or Worse

My colleague wrote this very insightful Forbes article about running a successful ICO. Useful for anyone looking to start developing their own! Posting here with permission from Jonathan.

Jonathan Chester, Contributor

Opinions expressed by Forbes Contributors are their own.
This is the second article of a two part series on ICO’s. The first article described what an ICO is and why both companies and investors alike are using this new form of raising capital. (https://www.forbes.com/sites/jonathanchester/2017/06/12/a-new-way-to-raise-money-the-initial-coin-offering/)

How To Run Your Own Initial Coin Offering

The amount of money being raised through Initial Coin Offerings (ICO) has quintupled since May of this year. The $380 million that had been raised as of May seemed amazing, then in less than one quarter an additional $1.4 billion flooded into the market. The four largest, Bancor, EOS, Tezos, and Status raised $670 million between them. The word bubble has been heard and that feels right, but this is no Tulip Mania. The concept of tokenized crowdsales is solid, $1.8 billion doesn't look crazy when compared against the $8 trillion over market capitalization during the dot.com bubble.

My company, Bitwage, has recently launched a sister company, Inwage, which provides software development and recruiting services for companies and enterprises that are building private or public blockchain projects, often times after or just before their own ICOs. Being a talent pool puts us in the position where customers ask us about what we've seen with other successful ICOs. While we have quite a bit of experience here, I set out to interview top ICO investors, entrepreneurs with ICO experience, and securities lawyers to bring you this guide on how to run your own ICO.

There are three primary things to consider when rolling out an Initial Coin Offering.

1. Technology

2. Legal/Regulation

3. Marketing/Investor Relations

Selecting the right blockchain is absolutely key. You want your token to sell quickly and securely, you want to protect those who invest, and while there are no regulations yet, there have been several hard lessons others have learned. The lack of regulation provides some wiggle room, but the SEC is coming, so study what the requirements are likely to be so you're ready to be compliant as soon as regulations are made. Once that is right you still need to standout in a very busy environment.

While this article mostly focuses on what entrepreneurs should be doing for their ICOs, what I describe here is a pretty good pre-flight checklist for anyone thinking of investing in an ICO. If you are examining a company that goes outside these bounds, they should be doing something extraordinary in one of the first two areas and working up to the third. The days of promote first and figure the rest out later are over.

Technology

There are three big ICO failures that entrepreneurs and investors should study. The DAO, CoinDash and the original ICO, Maidsafe. I spoke with Daniel Dabek, the CEO of the Safex decentralized marketplace and a pioneer and early developer for Maidsafe's SAFE network technology, to share his thoughts on what happened with the Maidsafe ICO.

“Maidsafe launched it’s ICO on the Mastercoin protocol, now called OMNI. The original plan was to only accept Mastercoin for 10% of the crowdsale since there was not much market liquidity for Mastercoin. Bitcoin would make up the rest of the sale. However, the smart contracts did not work as intended, there was a technological failure and Maidsafe ended up with Mastercoin making up 60% of the sale.”

Continue reading on https://www.forbes.com/sites/jonathanchester/2017/08/16/your-guide-on-how-to-run-an-ico-for-better-or-worse/#77dcdd9d3c58