some personal notes as a side observer on this whole ICO thing.
In the past 6 months I’ve been reading, just like a lot of you (or at least some of you), about what is going on with crypto currencies. One day, ~3 months ago a company came to me for product related issues they had. It doesn’t matter what they do, but i will say that it’s in AR.
I arrived at Bazel (Tel Aviv) to meet them and they started going over the deck with me. It was a good deck (and i’ve seen some), but in the middle they cut right from the product directly to ICO info, describing how and what the tokens look like and of course where they incorporate blockchain tech. Since then, 2 other companies have approached me, and that’s when hit me.
I’ve played with Bitcoin first in 2013. Back then I worked with Yadid (Evil Yadid//HC09) on his company, and we took some money to setup a GPU farm, long story short, we made some money and used it on stupid things. It was a novelty and kind of scary — the idea that a math equation actually created money, but I wondered: “How did it happen?” — not how mathematically — but how humans agreed to this.
Back to what hit me. Crypto currency (or as we cool people just say “crypto”) is the strongest (to date) implementation of blockchain. Relax, read on. When you truly learn how Bitcoin “works” you understand that it was created by engineers using math (not even the most complicated math) to create a technology that will be 1. Self-balancing 2. Decentralized (it’s not a buzz word, it’s a philosophy) and 3. Anonymous (or at least to your choosing). Now, what’s the best way to get people behind an idea? Yes, money. It’s that simple. So crypto is the best and first mainstream, use-case application of the blockchain tech. You only need to know approximately how much Bitcoin is worth today, or notice that your bank or favorite online store starts accepting Bitcoin. So what hit me? I felt I got what Blockchain technology can do.
Forget crypto for a moment, Let’s talk about Blockchain in your product. I was approached by a 2nd company, that did something with lead qualification on Blockchain, and they wanted me to help them position and communicate the product as they were preparing for an ICO in a month, and then a 3rd company which did something cool with hotel room ownerships and trading on Blockchain. With each one I had to move past the “are you real or just an ICO Hypebeast?”, cause let’s be honest, some (or more than some) are. I remember clearly that for both of them I said “this will be a shitty product, if it weren’t on Blockchain”, to which, they agreed.
Blockchain as a technological and mathematical principal changes everything. You can look at every business, government, finance, legal, medical, etc. in a whole new light. Blockchain is how people and technology can truly work together.
You see, these companies realized that it doesn’t matter what you do, you can utilize Blockchain for everything. But they were smart, they stuck to what they know whether it is computer vision for AR, high-end accommodations real estate, or lead qualifications. the founder or the team had at least 3 full years of experience int their respective fields. So what they did was maybe boring on the outside or at first, but once you see how they utilize Blockchain it’s amazing, it really is. Yes, I know I romanticize big time here but indulge me. Think about what decentralized or self-balancing system really means, and browse some popular apps and see how Blockchain reimagines even our most mundane social way of life. Even how we trust people, banks, services, etc.
So why ICO?
If your product exists because you inherently utilize Blockchain in it, this means you can and will have some crypto capabilities (of any kind) in it because, why not? But thats not why you should do it. When Ethreum introduced an open source platform for anything Blockchain and the idea of smart contracts — a different approach to what you can do with crypto and Blockchain — it added a new dimension to how startups, who already operate in Blockchain, see capital. To make it simple, think of it as Kickstarter or Indiegogo.
And that’s where I think one of the biggest problems with current ICOs — the people behind it forgot that in order to raise money (let alone form the public) you must have a plan and then some. And in today’s venture investments world — you need to have a complete game plan backed by a viable product before you raise anything. ICO is a great new technological way to raise money from the public, but in the tech venture investment world (where easily 80% of ICO campaigns are) there still is a requirement to be an actual business, with a working product (or MVP, beta), a clear business model and a go-to-market strategy. And why not? you are going to raise money from investors, they need to know what you do and how this investment will yield a good ROI.
So if ICO is the way you are going to raise fuding, keep this in mind: - Create all the info you would’ve anyway if you were going to raise “normal” venture capital - Preapre a full business plan with P&L, G2M, finances etc. - Show as much as you can! if you have demos, betas, trials — all we be good (remember that most companies in ICOs currently, are far from a product so that might give you a good differentiator - prepare a good market analysis and gap analysis for you target market (most poeple will have no idea what your market trends are, show it and explain it) - Create as many strategic partnerhsps you can, it boosts your product success probabilty - Know what your token allocation and terms are — this is a very technical thing and you must have someone with deep knowledge in Ethereum to handle this, this info is super important for your public investors - Focus on pre-sale. beofre your ICO laumches, if it won’t have some or the majority of the funding raised or committed — it can be very hard to raise it all from the public - A full ICO campaign with all that is required (Social, PR, Conferences, Marketing, travel, etc.) is $50K-$100K, keep that in mind - Your White-paper is your investor deck, only here a LOT more people will see it, so remember it has to explain everything and still be cool
New investments vehicles rise all the time, some will stay some will turn out to be Ponzi schemes, but new technologies- as meaningful as Blockchain can come along maybe once in a decade. When the tech is so powerful that it contain an investment vehicle inherently in it — that’s disruption of both sides of the tech-venture-business: the companies raising, and the investors themselves.
Ending with a quote:
Times are a changing… -Dylan
Thanks to Yoav Fisher (hide).