My name is Shahar Larry and i’m a noob.
Everyone is a noob at first – I am tired of hiding it.
I’m making my first steps in the world of ICOs.
[Dude, what’s an ICO? Well, it actually very simple. An ICO (Initial Coin Offering) is a sort of crowd-funding that is used to fund projects that hopefully create value. It is similar to IPO (Initial Public Offering). It is based on “Tokens”. Each ICO issues its own Tokens and defines its name, what it does, how it works, what’s allowed or not allowed to do with it, etc. This is done with something that is called Smart Contracts (I’ll write about that some other time). It’s very similar to Corporate Bonds (that also have names and specific terms). During the time of the ICO is open (on a website or dedicated platform), people, like you and me, can log in and buy the ICO Tokens (you normally pay for them with a cryptocurrency called Ether). These tokens give their owners certain benefits and privileges and can also be traded in a secondary market (just like stocks and bonds) – which in many cases results in their value appreciation and their owner enjoying capital gains. Oh yes, ICOs are always(?) based on blockchain (or blockchain-like) platforms which mean they are: decentralized, public and therefore transparent yet anonymous and secure. K?]
I’ve been listening in to the cryptocurrency talk for a couple of years now. More intently in the last year. I bought some bitcoin and Ether recently. Over the past six months, since I was first introduced to the ICO concept, I’ve been learning about this new developing domain. The learning curve is exponential – which means it starts slow – painfully slow – until it explodes. In the past several weeks I have started feeling the inflection point and things started to click. I am knee deep in writing one Whitepaper for a revolutionary venture in the field of peer-to-peer trading and I’m working on designing the concept for another ICO scheduled for next spring.
I’m not a techy – but I understand “Techese” (Math/Physics background).
I’ve spent most of the past decade in different forms of consulting – mostly in the field of Innovation with multi-nationals.
I was and am an entrepreneur.
What I write comes from the perspective of someone who is curious, enthusiastic, not afraid to learn and in general looks at these new domains from a business/strategic/conceptual/future-implications/potential perspectives.
I figured I’ll share some of my learnings, as I assume there are other people, like me, making their first steps into this world. Stuff I’ll post will not be prioritized according to their importance or their complexity – it’s more what I can release fairly easily and that I think you will find interesting.
The first piece is about a sort of 101 checklist. It’s was collected from talking to experienced people and reading some interesting pieces (sources below).
This is not meant to be comprehensive and I am sure it’s peppered with mistakes – first of all chill – now, send us a note and will correct, add, omit and be happy with learning something new.
ICO Salient Topics and Questions to Address
- You gotta understand the basics — so that you can converse with the experts — this is not a field for those who are afraid of delving into the tech.
- You gotta get (or join) some strong, deeply knowledgeable, relevant-technology experts. It’s not enough to get them on the advisory board — although that is great. You need a co-founder that is known and respected by the community and that knows her shit.
- I’ll do a tech platform 101 later
- Choosing an ICO Launch Platform
- Developing independently with subcontracted developers
- Using existing platforms such as ambisafe, waves, Validity labs
Regulation and Compliance
- Once you understand the underlying principles of the technology and what is does and can do, you need to see where it meets the regulatory systems and the compliance requirements and also the potential risks and exposures. Read. The internet is full of great stuff.
- This means you will need to choose: Type of legal entity (DAO / CODE), Jurisdiction, Regulatory expert support, by reputable bodies (with, in some cases pre-ruling)
- We’re doing it in Switzerland
- Geographic jurisdiction — Deciding where the company/legal entity will incorporate.
- Regulation strategy and “playbook” (what-if scenario planning):
- Identifying the key potential regulator risks and planning how to mitigate them.
- Developing key possible risk scenarios and planning how to mitigate them (e.g., ICO is blocked in the jurisdiction you planned to launch it in).
Legal and Commercial Infrastructure
- Finding legal Support — There are some law firms that have an ICO practice and can be added to the whitepaper as partners.
- Try to have someone on the team that is either a lawyer or an experienced entrepreneur that drafted similar agreements in the past and can read legalese. The fundamental structure of these agreements is very similar and there is transferable knowledge from experienced accrued in other domains.
- Preparing commercial agreements for different types of pre-sale engagements, such as:
- Supporting partners (e.g., ICO launch platform or legal support)
- Subcontractors and service providers (e.g., developers, designers)
- Employees — similar to ESOP
- Equity partners
Having those in advance will make recruiting and negotiation easier.
- This is important.
- It’s still a fairly new industry but it has its own vernacular. Study it. If only for respect.
- I found that many of the important figures in this community, and I suspect most of the active community, are honest, almost idealistic people. They hate lies. They hate ambiguity. The respect and reward transparency and direct speech. Also, humility is important. (In life, in general, and especially here)
- Start early — like really early — so you have some mileage when you get to it.
- Look at different social platforms that fit different target audiences (Some overlap but consider: Techies, investors, community leaders etc.). We’re talking about: Medium, Telegram, LinkedIn, Reddit — and there are a lot more I am sure — as I said I’m a noobie.
- There are a lot of different whitepapers circulating out there and almost as many opinions about them
- Here are my two cents:
- The Whitepaper is not a business plan nor an academic — it is something in between. However, it does need to lean more towards the technology, science, and deep underlying knowledge or innovation. It also needs to show a good understanding and clear strategy of the ICO mechanics and what you intend to do and how will things/tokens work. Nevertheless, the business side of things should not be neglected (I think) and it has its place.
- Look and Feel. I am sorry, I am not impressed by the purists that publish Whitepapers that look like black and white academic math papers (and require a CS graduate degree to decipher). One can deliver strong substance in a nice package that is easier for most people to read. The market is attracting less savvy people, who are still experienced and smart and who are used to a different way of presenting stuff.
- Multiple versions is probably a good idea — this way you can change the focus from geek to business.
Other uncategorized stuff and checklists
- An ICO is a means to raise money to fund a venture. In this respect, it is very similar to other avenues of raising money. The focus needs to be the venture. Speculative investment speak will make people suspicious — and rightfully so.
- Don’t be lazy — read! A lot! And think critically. Be humble and learn. Be quiet and listen in, until you have something interesting to say.
Team and Recruiting
- Product Development Team — Don’t wait till after the ICO — you’re developing a company — a real solution to a real problem — you need dev people for that (where will you pay them from? Well, seed round is probably in order)
- Advisory Board — This one is important — I’ll give it its own header:
- Technology — experts in various relevant fields such as:
- Blockchain, Ethereum, smart contract, etc.
- Cybersecurity and fraud prevention
- Software development
- Mobile apps
- Specific sub-field experts in relevant fields such as Social trading (Marketplace) or Currency/token dynamics
- [The Editor is being annoying — no sequential numbering available – imagine this is number 2] Use cases — experts in various relevant fields
- Science — experts in relevant fields
- Legal and Regulation
- Specialized VCs such as (I don’t know them — I am not recommending them — I’m not an authority — remember — Noob):
- Spice VC
- Digital Currency Group
- Polychain Capital — Hedge fund that raised 250m for ICOS from, amongst others: Andreessen Horowitz andSequoia
- Starta Capital VC Fund
- Polish Private Equity and Venture Capital Association
- ICOs Capital
Good resource list
That’s it for now.
Will share more in due time.