Traditionally, there have been limited ways in which to raise funds to build and expand a business. A company could start small and grow, as per its profit, which might lead to stagnation. Alternately, a business could look for outside investors, providing a quick influx of cash but taking away a portion of the ownership. Another method saw companies going public, raising funds from individuals by selling shares through an IPO.
Taking its cue from IPOs, 2017 saw the advent of ICOs! Collectively, ICOs managed to raise over $5 billion in 2017, with the most successful raising $200 million. In fact, ICOs have become so popular that they raised $13.7 billion in the first 5 months of 2018 alone according to Business Insider.
ICOs have attracted 3 times more investment than VCs since 2017. It is little wonder then that businesses are increasingly looking at blockchain solutions for their business model. However, just as not all business models lend themselves to a crypto solution, marketing an ICO can be very different from pitching to venture capitalists. Not only do the two financing routes require marketing on different platforms, they also require different skills sets.
Major Differences between ICO Marketing and Pitching to VCs
Trying to convince thousands of people to invest in tokens is very different to courting a single large investor. With a well-written whitepaper and a highly innovative idea, an ICO may still be successful despite the overall concept being a work in progress. In contrast, VCs are experienced entrepreneurs with a shred mind for business. They want to see a detailed roadmap and know exactly how they can benefit from the process. VCs can easily detect a weak or unfinished product and are likely to cross-question your every move. A VC raise at the very least usually demands a working prototype.
There are no formal requirements in ICO marketing. It’s up to each individual ICO team to decide what the token holders will get in exchange for their money and to market this in an attractive way.
With regards to pitching to VCs, a working product and a very clear vision are usually necessary as well as a well-prepared roadmap and documentation; all of which are needed to attract investment. You also need to share a stake in your company in exchange for funding.
While marketing an ICO, there are no accessibility or geographical restrictions. Your goal should be to reach out to as many people around the globe as possible.
Geography can create hinderance while pitching to VCs. Such investors are usually conservative and prefer businesses from their own country. They want you to come to numerous meetings and events. It might involve a lot of paperwork too.
4. Press and Public Perception
ICOs are all about the public and their perception of your blockchain project. So, you need to create a killer website and a buzz on social media and other known platforms. This requires a lot of research, content creation, self-promotion and resources and time to create relationships with various media outlets.
The press and the public don’t really play a role when you seek funding from a venture capitalist. It is a single individual or large organisation that you need to win over with your presentation.
The near instant liquidity supplied by an ICO is unmatched. So, while marketing your token sale, pay special attention to building trust among the masses. Lucrative liquidity backed by a strong product has the most potential to create a buzz in the market.
While pitching to a VC, you need to focus on long term benefits and returns on your products. If a founder wants instant liquidity, selling out their stake might be the only viable option.
6. Community Management
For a successful ICO marketing strategy, you need to know how to engage the very active crypto communities online. An ICO that doesn’t respond to its users on social media may develop a negative image.
As mentioned earlier, with venture capitalists, you are focused on one entity at a time. So, prepare your presentation according to what that individual or organisation might be looking for. This means prior research on the VC to create a suitable presentation or business plan.
Most importantly, while seeking the help of VCs, the business owner might be the best person to engage with the financers and sell the business idea to them. ICOs require an entire team to create various types of content and keep the community engaged. The best course of action might be to outsource the marketing to an experienced team for best results.