Estimating the Expected Expenditure to Incur on an ICO

vanessajane 06.03.2021
0 người theo dõi 0 bình luận 5 bài chia sẻ

ICO (Initial Coin Offerings) have acquired a status of being an easy method to raise capital cost-effectively without losing control on equity. They pip the traditional methods of fundraising such as bank loans and venture capital as it is easy to set up without any cumbersome procedures.

When speaking about the costs, there is no definite budget to be allotted for assuring the success of a project. However, a significant amount needs to be allocated for ensuring a safe, legally compliant ICO providing real value to a community of contributors.

The major expenses involved in an ICO project are

Conceptual development - The concept behind an ICO must be technically and economically feasible for implementation in the market. Blockchain technology should form an integral part in solving the problem that you are specifically addressing. This would convince the usage of your product by the target audience in the long run. It would cost around $15000 - $75,000 depending on the complexity of the technology to be used and the token economics behind the product. A blockchain researcher, blockchain lawyer, and an expert who understands token economics and business models would be needed as part of the team for executing the project smoothly.

Technology development - There has to be a solid plan regarding how the technology of the blockchain network will work. It includes details like how blockchain technology would assist in solving your specific problem, project scope and timeline of milestones, token economics, terms and conditions mentioned in the token sale, and other security aspects involved in the platform. Based on the complexity of the project, technology development may involve expenses of $25000 - $50,000. Apart from a blockchain researcher and a lawyer, a blockchain security engineer and architect would also be required in the team.

Compliance with regulations - The firm has to comply with regulations depending on its operational jurisdiction. KYC (Know Your Customer) and AML (Anti Money Laundering) guidelines need to be followed along with rules related to the issue of security tokens and token offering. The laws are continuously evolving across the world. Legal advisors need to be well-equipped with the changing market trends and possess specialized knowledge about blockchain technology and cryptocurrencies. Around $100,000 to $200,000 would have to be spent on hiring competent legal advisors. A legal advisor, in-house legal counsel to deal with suits and cases, compliance manager and data privacy manager would be needed as part of the team.

Token sale system creation - The platform has to be stable enough to handle an increasing number of transactions being executed by users. A landing page needs to be developed for disclosing your product’s story and the reason behind launching an ICO. It should direct the user to the token sale platform. A dedicated admin portal should be formed for managing the operations of the token buyers and use the smart contracts for governing the token distribution strategy among the buyers. It will cost around $65,000 - $100,000. It is better to acquire a white label solution as it is cost-effective than developing the platform in-house which would require a longer development timeline. A product manager, UI/UX designer, software engineers, copywriters, and content writers would be required.

Cybersecurity management - Due to the risks of funds being swindled from ICO’s, cybersecurity is highly critical. It includes the protection of smart contracts through regular security audits, penetration testing, security monitoring and activating an incident response. A minimum of $40,000 would be required for spending on Cybersecurity management. Hence, experienced cybersecurity professionals who have worked previously with blockchain technology and crypto-related projects would be required.

Marketing campaign execution - A well-executed marketing campaign would involve several aspects such as bounty program management, social media promotion, publishing your ICO on the leading ICO sites, sharing press releases, indulging in paid advertisements, content management, and participating in events and conferences. The budget can go as low as $40,000 or shoot up to $400,000 depending on the scale and intensity of your marketing efforts. Cost-efficient channels of communication must be chosen by closely analyzing the traffic fetched to the landing page. Hence the team must include a bounty program manager, community manager, social media manager, and a content manager.

Managing investor and buyer relations - It involves the creation of the pre-sale offering, order book building, investor outreach, and focus on institutional sales. Establishing a deep relationship with investors requires a good understanding of blockchain technology and product knowledge. An estimated amount of $55,000 - $100,000 would be needed. The cost would shoot up if the firm plans to list on top exchanges in the market such as Binance. Hence, an investor relations manager and a finance manager need to be recruited.

Presence of ICO advisors - With so many changes occurring in the industry simultaneously, advisors will help you to go on the right path. They should be well-versed with the business dynamics, legal implications, marketing aspects, design intricacies, security regulations, and content management. Check the background and experience of advisors before hiring them. Go for a balanced team with people from multiple disciplines.

Launching an ICO can involve a time frame of three to six months depending on the expertise of the team, complexity of the project, and collaboration with external partners.

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