The most effective method of fundraising for startups in 2019
IEO has been one of the hottest topics for discussion of the whole crypto community in 2019.
If we analyze the situation, the appearance of IEO might be perceived as a natural evolution and advancing maturity of crypto-economics. The IEO mechanism has a lot of benefits, however, some specialists share their concerns about the disadvantages organizers might face. How effective is this method of fundraising? Let’s take a closer look.
Let’s make it totally clear. Conducting successful IEO is possible. However, there are some major push backs that startups must be aware of.
- You need to build a real supportive community behind the project and make the whole world know about it.
- Startups should heavily invest their time and money in marketing and follow a “5 to 1” ratio (for every 1 million you intend to raise, you have to spend at least 200K on marketing)
- Lack of interest from real investors. Even if you spend enough money on marketing, it is very difficult to target investors.
- Traders are the major part of any exchange’s community. They are here for short-term profits and usually, your project is not their number 1 priority, they seek ROI after listing. With the whole altcoin market being in a depressed state, traders are hesitant to invest.
The exception is a huge exchange, but if you have enough money to conduct an IEO there, are you sure that you need investments in the first place?
Nonetheless, there is a more sophisticated way to raise funds — Private Sale. You can target investors that are specifically interested in any particular field if the hosting platform has a big enough pool of investors.
A private sale is a way to connect businesses with investors in an environment that is more intimate and less structured.
It’s not just a way to raise funds privately for blockchain initiatives, but also to get influential players on board with business concepts and ideas based on, essentially establishing concept champions in a sale.
Moreover, it allows startups to focus their time and money on the product itself instead of unnecessary marketing activities.
The answer is: it is far more effective than IEO. Nevertheless, startups need to have a well-developed MVP, at least some traction and a thought out business plan.
A team of former management consultants prepares an explicit Pitch Deck, which covers the business side of the startup. After that, they use their well-established network connections to spread it among funds and individual investors.
With the help of exclusive bonuses and negotiating skills, the sale round usually ends within 2 weeks.
It is fair to conclude that Private Sale has proven to be one of the most cost-effective ways not only to raise funds but also to scale business via new connections with decision-makers and key players in the Blockchain sphere.
We at SHORTEX deeply value the time and money of our clients. The days of simple IEOs/ICOs are over.
Having tested the attraction of private capital to several projects, we сame to the conclusion that this is one of the most effective fundraisings techniques.
(If these conditions are met: MVP and precise hypothesis testing)
We are looking for driven teams and projects that want to attract additional capital and scale their businesses.
If your project suits these conditions, shoot us an application!
Published at Thu, 12 Sep 2019 17:23:26 +0000
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