An ICO Launch is a method of funding which uses cryptocurrencies. ICO launches can be a source of capital for start-up blockchain companies. Tokens sold during an ICO launch are promoted as future functional units of currency for use within the ICOs project.
Initial coin offerings, also called token sales, are funding rounds for cryptocurrency projects – comparable to an IPO for a private company which is becoming publicly listed.
Token buyers participate in ICOs for a variety of reasons. Some buyers are purely speculative – they buy tokens with the view that as the use of a platform increases, so too shall demand for it’s tokens, and subsequently the price will increase.
Other token buyers participate in ICOs because they want to use the token for it’s future utility value, or it’s defined use case, like accessing a proprietary platform or paying settlements and fees on the platform.
An ICO launch isn’t all about the token sale though. The launch of a token requires many months of market research. With over 1,500 tokens in existence, companies should first evaluate whether their project actually requires a native token to operate.
Companies thinking of launching an ICO must ensure that their token is integral to the use or function of some future aspect of their business model. If, like many ICO launches which have been and gone, a business sees an ICO as a way of raising fast capital without the obligations of traditional raises, this will likely affect your tokens price and could carry legal implications.
How much does it cost to launch an ICO?
Launching a successful ICO will cost between €20,000 to €50,000 – largely for the pre-public engagement phase, including tokenomic design, legal fees, whitepaper production and web design. Exchange listings and other fees during and after an ICO launch will push these costs higher.
ICO marketing spend is the major driver of token sale expenditure, and operators often spend 10 – 20% of the projects total funding target on marketing campaigns. In turn, marketing campaigns will be the single largest driver of ICO participants to your token sale landing page.
The second most prominent costs for operators are ICO legal services, which can often mount up into the six figure range for ICO operators seeking independent legal advice – a huge cost to incur at such an early stage of an ICO project.
However ICO legal costs can be reduced significantly by launching an ICO through an agency which uses local legal firms, such as ICO Launch Malta, often reducing ICO legal spend to the region of just €20,000.
Fees typically increase after launch, once a token has commenced trading. Although listing fees are very low on decentralized exchanges, token sale operators usually opt to list their token on a major exchange. Major cryptocurrency exchange listing often costs ICOs between $1 million and $3 million.
ICO Launch Malta is an expert in ICO legal advice and compliance. Our robust, fullstack ICO platform and legal packages ensure your project meets regulation, whilst offering significant time and cost savings over individual service providers.
How long does an ICO take?
An ICO Launch takes approximately 3-6 months – to complete. This time frame varies according to the scope of the ICO project. A lot of this time will be spent building the token, legal work, and producing documentation. Successful ICOs will adapt to market conditions and manage their time and token launch accordingly.
Initial coin offerings don’t have to be a drawn out and lengthy process. The actual launch of a token sale, if the operator uses a dedicated ICO platform, can be fairly quick and hassle free, with clients of the ICO Malta tokensale platform able to be live within a week.
But before ICO operators embark on their launch, they should take time to consider every aspect of their sale, especially during their pre-public engagement phase.
The pre-public engagement phase is, arguably, the most important period for an ICO. This is the time which teams establish the need for their token, and therefore a token sale, develop their tokens use case and tokenomics, production of documentation such as whitepapers and web content, and legal review of their token and ICO.
This phase takes around six months to one year, largely dependent on the complexity of the ICO project, and the jurisdiction it’s launching from – for instance, crypto friendly jurisdictions, such as Malta, are more likely to deliver operators timely ICO legal services.
Once these key details are established and legal status confirmed, a project can go ahead and announce their ICO – the first official public communication of the project. Once reaching the post-public engagement phase, ICOs generally proceed with their token sale and marketing – which often concludes within three months of the beginning of the sale.
What is an ICO pre sale?
An ICO pre sale is a token sale event which token issuers offer before the official public ICO. Issuers release a portion of their tokens at a discount for those who buy in during the pre sale. An ICO pre-sale is a great method of raising funds early on in a token sale, to increase marketing budget during the further stages of an ICO.
Some token sale operators may choose to offer their pre-sale publicly, to anyone who wants to participate, or they may impose limits to who can participate.
Participants are usually limited either by minimum contribution amounts, for example only those spending 50 ETH may participate in a pre-sale, or likewise pre-sales may be opened exclusively to a select group of interested parties who have a track record of investing in early stage token start-ups.
Pre-sales are a great method of raising funds early on in a token sale, to increase marketing budget and reach during the further stages of an ICO.
Done correctly, ICOs can bring a serious amount of funding to a new project or a tokenized area of your existing business. However, to ensure your ICO meets regulatory requirements and reaches your target raise, consider using the expert services of ICO Launch Malta.