The potential evolution of the ICO market and how they'll need to rise to the challenge.
October 3, 2018
In 2017 $4.6 billion (US Dollars) of start-up capital was raised via ICO and as a result, the ICO has undoubtedly arrived as a powerful form of Crowdfunding; although a step apart from the mainstream Crowdfunding platforms.
2018 is the year where the ICO has begun to mature as for the first time established corporations are beginning to look at it as a way of raising capital. Until now mainstream institutions have been resistant to ICOs due to the lack of regulation which exists in the market, but change is in the air.
Firstly we are seeing Regulators from across the world turn their attention to the unregulated Utility Token market, which has had its reputation tarnished by the number of scams in the marketplace and unfortunately this has publicly overshadowed the numerous credible Blockchain projects which have funded themselves via ICO.
Secondly, we are seeing the emergence of Security Tokens. This development allows companies to use an ICO to issue digital tokens that provide similar ownership rights to shares and thus this provides a more conventionally credible mechanism to raise capital. This means companies can now access more investors at a lower cost than if they were to list shares on a stock exchange.
These developments mean that Security Tokens could well become the go-to form of funding for more established startups and for businesses looking to tokenise their securities offering.
Google “ICO Marketing” and you will come across lists of ‘must have’ things you need. Your search will return swathes of eye-wateringly expensive ‘off the shelf’ marketing solutions and must do articles from experts (to which this article may add).
However, in reality, marketing ICOs is a marketing challenge consistent with any other. Marketing will help define a brand, create a brand presence, help create an understanding of a product or service and showcase this to potential investors and the world.
Good ICO marketing is not a one size fits all activity. In reality, it is as complex and nuanced as the business being marketed.
So how do you market an ICO which is using a Security Token? In our opinion much the same way as an ICO using a Utility Token.
Our experience in marketing regulated financial services as well ICOs has lead us to work with clients who choose to issue Utility Tokens in a ‘compliant’ way and our clients have been keen to make sure their message speaks to those who may wish to buy their tokens and earn their trust. A good foundation for any successful relationship.
The increase in prominence of Security Token offerings at ICO will likely see the Security Token based ICOs operate in a regulated arena where marketing practices will have to adhere to regulations akin to the financial promotion rules we see in most developed economies.
The future for ICOs will likely be one where both Utility Tokens and Security Tokens are issued. The Security Token may become more straightforward than launching a utility ICO from a regulatory and legal standpoint, but the costs will be greater through regulatory compliance and legal fees. Utility Tokens may become the preserve of the smaller start-up project who list in a ‘compliant’ manner but in a regulatory grey environment and/or in jurisdictions seen to be ICO friendly.
The future for ICO marketing is clear though, the days of high cost prescriptive low impact ‘off the shelf’ marketing packages are coming to an end, to be replaced by a professional consultative solution motivated by delivering ROI for clients and not profiteering off the latest tech boom.