An Initial Exchange Offering (IEO) is basically an Initial Coin Offering (ICO) carried out through an exchange. From an investment perspective, the marketing appeal of an IEO lies in its function as a crowdfunding strategy that leverages on the reputation of the host exchange. Since Binance launched the world’s first IEO platform back in 2017, the use of IEOs has increased by leaps and bounds. So what exactly are the benefits of an IEO?
From the outset, the fact that an IEO is screened and backed by an exchange allows crypto investors to subscribe in confidence, knowing that they are not being leeched by unscrupulous fraudsters and scammers. The higher industry standards brought about by the advent of IEOs would restore — to a certain extent — the integrity of the crypto fundraising market, which has been significantly dampened by rampant fraud and scams masquerading as ICOs.
Now that the IEO, with all its benefits, has taken the spotlight, let’s take a closer look at what makes a successful IEO.
The first step towards launching a successful IEO is to put together a dream team which consists of industry personnel with impressive track records. In relatively new and rapidly developing markets, such as that of crypto fundraising, it isn’t too hard for investors to suss out the who’s who of reputable players.
Once your team is in place, you can get started on the whitepaper.
As your whitepaper is effectively your prospectus through which you blast your sales pitch to potential subscribers about what makes your project worth their attention and money, it should be as extensive and elaborate as possible, so long as it does not end up being too much of a bore.
At the minimum, your whitepaper should cover (1) the justifications for your choice of financial model; (2) a description of your underlying project and the manner in which your products or services will fulfill existing market needs; (3) your competitors and what sort of an edge you have over them; (4) the population segment to which your products or services will be marketed; and (5) the credentials of your dream team.
Once you have a draft, get it vetted by an external advisor, as their review will provide you with an alternative perspective.
Before you engage an exchange to host your IEO, work on developing a proof of concept — a functional prototype of your product in the form of a Minimum Viable Product (MVP) or a demonstration plan for your service. This will stand as a testament to the conceptual soundness of your underlying project.
Once your functional prototype or demonstration plan is ready, do your homework prior to selecting the host exchange for your IEO. This includes the reputation of the exchange, its user base, and the extent to which the exchange complements your funding goals. With this, you are all set to go.
Choosing an IEO as your mode of offering will enhance your credibility and your project’s legitimacy, which, in turn, will be a big boost to your project’s fundraising prospects, given the bad rap ICO frauds and scams have given the crypto fundraising market. Nonetheless, if you are going to ride the IEO tide, make sure you do it with the right team and the right exchange.
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