When I’m reminded of crowdfunding projects like Filecoin, Bancor, Tezos… among many others who succeeded in raising funds in the range of nine figures, I can’t help but wonder what it took in terms of financial resources to ‘net that whale’.
Looking closely at the way ICOs prepare for their crowdfunding events, it’s no surprise they attain the type of results they get. They spend time and money looking for the right resources to equip themselves with in order to make it a grandeur.
Initial coin offering events have different stages, from the planning to the execution, funds are required to manage the process smoothly. Some ICO creators prefer to launch a direct token sales event than go through the rigorous time consuming process of pre-, main and post- ICO token sales. however, at the different stages, one can assess the viability of the project before the platform is finally launched.
As there are different aspects that contribute to a successful ICO event, just how much is needed to bring the dream to life? The following observations should shed some light on the budget scope of most ICOs.
Surprisingly, it is quite the norm for ICO events to attract various technical experts who are versed in different aspects of the blockchain technology. This part of the budget consumes 60 – 65% of the total budget and compensatory tools would always influence the startup in the forward direction.
The type of decentralized system to be developed also determines the key players in the team. From frontend to backend programmers to economic analysts; the entire team work in synergy to bring out the glow in the project.
Large scale ideas will employ the use of professionals (career driven experts), where the cost of hiring is over the chart when gazed upon by small and medium scale enterprises or even startups. While freelancers may charge hourly rates and may decide to allow emotions judge their rates, working for an already established brand can payoff in real time.
Here’s a list of some key role players and an estimated worth of hiring:
|Job title||Average salary / annum||Average hourly pay|
|Frontend developer||$43,552 – $105,151||$15 – $57|
|Backend developer||$27,040 – $92,432||$27 – $60|
|Full stack developer||$42,860 – $122,193||$55 – $75|
|Blockchain analyst||$39,746 – $174,244||$35 – $80|
|Cryptoeconomist||$45,495 – $150,000||$20 – $70|
|Public Relation Manager||$37,382 – $101,853||$42 – $56|
Also on the team, worthy of note are the advisers, who also get paid according to the contract. These are responsible for providing both technical and non-technical experiences and sometimes have major deciding vote as to how the project would head. Securing the attention of an influential investor or technophiles and having him on the team would inspire the crowd of potential investors. – it goes without saying that the cost involved is no joke.
Also freelance sublets could be hired to facility the progress of the project along the timeline. These fees are usually tagged under miscellaneous expenditures.
At this stage, the development team have produced a tentative timeline needed to complete the project. The next step would involve proposing the startup idea to various media outlets at their disposal (TV media is exclusive to ICO-friendly jurisdiction); although most publicity outlets at the disposal of ICOs include but not limited to youtube, facebook, twitter, blogspots, cryptocurrency forums, news (press release) websites, etc. More online media outlets are being released daily to facilitate the distribution of ICOs publicity content. All these outlets charge certain amounts to host contents from ICO campaigns. While some of them may be free, others charge premium services to enhance the efficiency of content distribution.
Estimated cost of pre-event publicity and advertisement can range from as low as $100 to as high as $10,000 or even more. This would involve expenditures on interviews, promotions through social media campaigns and bitcoin forums. Most ICO projects would rather spend much money on advertising and pay advertising companies heavy traffic fees to reach out to their prospective audience.
Publicity of your ICO can sometimes take up more than 30% of the allocated budget for expenditure during the ICO development stage. This is because, without the public investors in mind, an ICO would not survive the heat of trending ICOs that pop out at a frequent rate.
Initial Coin Offerings are built and centered around enthusiasts, investors and traders. A unique advertising and strategy that captures all three categories would require a high degree of financial input.
When cutting across a global market, some project developers travel to different states, countries and as far as continents to seek potential sponsors and partners. These costs are driven by the budgetary terms and allocation. Not frequently experienced due to jurisdictional constraints, but a noble platform for investors and prospective partners to meet are through the internet.
Logistics could involve the little items as stationeries, purchase and transportation of hardware or special equipment (where necessary).
Once the ICO is in the token sales period, it is important for the development team to take into consideration risks that could emerge. These may include:
Security risks posed to the programme development:
These include, web security from hackers and physical security of hardware (where applicable). Security measures to prevent theft of intellectual property; because ICOs are generally unregulated, every aspect of the project requires protection from unsourced and unauthorized personnel.
Legal fees to cover for violation of financial security policies:
While the ICO progresses, and large sums are being donated/contributed by project proponents, it raises flags and alerts government agencies. Unregulated ICOs always stand at a risk of being disavowed from legal inclusions. But just to be on the safe side, legal experts on the advisory board would always be a plus.
In general, the running cost for an ICO event would vary from project to project. The objective of the startup will also determine the nature of the work force and the determining team. While anyone who is enthusiastic about the blockchain technology can provide analysis of how the system works, you would most likely need an expert who can give you experiential and valuable knowledge-base resource related to the project you are working on.
While some crowdfundings wait until they receive early entry payments from investors to settle debts and handle other budgetary items, it is wise to have at least a quarter (1/4) of total expenditures to be made before diving into any crowdfunding activity, also contract agreements can be negotiated between partners and team members to reduce first stage running cost of the project.