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What is an ICO?

The life cycle of an ICO

The Initial Coin Offering (ICO) is a great way for new blockchain projects to raise funds.

ICOs are increasing in popularity and this guide outlines the life cycle of an ICO.  Lots of planning and behind-the-scenes work goes into the organisation and deployment of a successful Initial Coin Offering, and most of the best ones execute certain steps from idea to token distribution.

Here is our guide to the lifecycle of an ICO.

The life cycle of an ICO begins with The Idea

An Initial Coin Offering always starts with an idea. A dream. A vision. The newness of blockchain technology, paired with a bevy of worldwide funding, has a way of prompting innovation like we’ve never seen before.  Someone, or some group of people, with an idea moves towards the direction of starting a blockchain project, and the rest is history.

Team formation and internal growth

With a blockchain idea in place, founders will begin to take action and enlist other connections for help as team members. A team of individuals will form around this idea and begin planning out their moves up until token distribution and beyond. Advisors and experienced professionals may be recruited and join the team to provide guidance over its earliest stages.

Planning the project

Many teams will start out with little upfront capital, and so they are forced to turn to other resources for sustained funding. A common way of crowdfunding for new blockchain projects is holding an ICO, where early investors exchange cash (or other cryptocurrencies) for coins.

Traditional early investors in technology companies might receive some form of equity, but in an ICO, the coins offered to investors are the substitute. If/when these coins increase in value, investors hope to eventually have the option to sell their coins at a higher price and make money on their initial investment. Thus, as a crowd investment, the ICO is an innovative way of raising early seed capital from many, typically smaller, investors for project development.

Early product creation

Planning to run an ICO, a blockchain project will typically begin creating material that can be used in the announcement of their idea. First impressions can be the difference between a successfully-funded ICO and a flop, so it’s important for aspiring blockchain enthusiasts to get off on the right foot with potential investors. Perfecting the concept statement, drafting a white paper and creating promotional materials all fall into this stage of the ICO lifecycle. Additionally, the team will need to create and develop the tokens for ICO distribution.

While these things may be done before or after the announcement of new blockchain project intentions, it is most effective for an aspiring ICO to have a solid foundation in place when going public with their plan.

Public announcement

With a plan to move forward, the next stage in the lifecycle of an ICO will be for the project to announce their idea and intentions to potential investors. This announcement might include development details and other marketing material that entices the investment community to take another look at what their project has to offer.

Most importantly, however, the team will state their intentions to hold an ICO. Details about everything related to participation should be included. Typically, some sort of timeline will be laid out with dates and deadlines for the ICO. Alongside this timeline, you can expect to see ICO token prices, distribution percentages, token lockup periods, and more. Everything pertaining to the ICO should be released, allowing investors to make an informed decision, and hopefully increasing their likelihood of ICO participation.

Holding the ICO

When they’re ready, the project will hold the ICO, which will typically last anywhere from a few days to several weeks. Many ICOs are limited to a certain number of tokens, however, so investors looking to capitalise on the ICO price will want to act quickly and be aware of the opening date and time. Upon completion of the ICO, the project will distribute tokens to its investors based on their investment amounts.

Continued development

After the ICO is held, the project will hopefully have raised enough money to fund further development efforts. The ICO is by no means the end of the road for an upstart blockchain project; rather, it should be just the beginning of more profound efforts to launch meaningful innovations and make an impact on the world. ICO funding isn’t everything, but it definitely pushes a new project in the right direction.

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