What is really involved in a token crowdsaleâ€Šâ€”â€Šand where can you save on expenses without sacrificing the success of yourÂ project?
Launching a token crowdsale can be intimidating. Whether or not you are familiar with the world of blockchain, there are a lot of factors to consider before diving into a token crowdsale. One of the first considerations should be how much the process will costâ€Šâ€”â€Šand whether you can affordÂ it.
Unfortunately, most start-ups hugely underestimate the amount of time and money required to launch a successful token crowdsale. Founders are more likely to focus on the positivesâ€Šâ€”â€Šthe potential to find a worldwide base of supportive contributors and raise funds without losingÂ equity.
In our recent interviews with startup founders, we found that on average, founders expect set-up costs to be around $75,000. Only later down the road, they find out that costs can be upwards of $500,000, when all elements needed for a successful token crowdsale are considered.
Thatâ€™s an 85 percent increase in costs. Clearly, somewhere, there is a breakdown between expectations and reality. What is really involved in a token crowdsaleâ€Šâ€”â€Šand where can you save on expenses without sacrificing the success of yourÂ project?
The Phases of a Token Crowdsale
Like any project, different phases of your token crowdsale will come with different challenges andÂ costs.
The first phase is concept development. What project are you building? If you already have an existing product or service, how do you plan to enhance it with blockchain? How will blockchain help solve a specificÂ problem?
You may need to develop a basic prototype. This ideation and prototyping stage could cost $10,000 or more, depending on whether you already have the resources in-house to help plan or build a concept design. If you donâ€™t, it will cost considerably more to outsource an expert. For example, recruiting a developer or research scientist with blockchain experience.
Once you have a concept, the next step is to build your company, your project, and yourÂ team.
Developing technology can be costly, as you need the right expertise on board to plan and research how your blockchain project will work. On top of R&D, you need to start considering how you will market your project and find supporters for your upcoming crowdsale.
This lead-up (the presale phase) can take anywhere from three to six months, or longer. Potential costsÂ include:
- Company incorporation and legalÂ advice
- Company naming andÂ branding
- Project development (hiring developers, analysts, data scientists, etc.)
- Consulting or hiring a legalÂ expert
- Hiring analysts and/or advisors with experience in blockchain
- Finding a marketing expert to plan marketing activities and strategies
- Web development andÂ design
- Smart contract development to facilitate and govern your token crowdsale
- Expanding your marketing team or hiring contractors for social media management, public relations, copywriting, product design and other marketing tasks
Clearly, there are a lot of factors associated with this phaseâ€Šâ€”â€Šand remember, this is before the actual launch of your crowdsale (the public phase), where you will need to actually execute the smart contracts and consider your nextÂ steps.
In the words of a CTO of a company currently undergoing a token crowdsale:
â€œICO launch is a six month distraction in building our product. We have to become a marketing company instead.â€�
Buy vs Build: Whatâ€™s the BestÂ Bet?
Creating and uploading a secure, audited smart contract is one of the most important steps to a successful token crowdsale. For many startups, building a token crowdsale and smart contract from the ground up is simply not realistic, given the expertise required. Although there are some clear advantages to building a custom solutionâ€Šâ€”â€Šyou get exactly what you want. But, you have to consider that the associated price tag can be steep, and the risk of failure remains theÂ same.
Costs vary for a custom-built solution, depending on the experience of developers and experts involved. When conducting a rough estimate, consider what hires and contractors you would need for token creation, smart contract auditing, and efficient smart contract execution, bearing inÂ mind:
- You need to factor in the cost of consultations, requirement collection, smart contract creation, smart contract testing, whitelisting, and auditÂ services
- The whitelisting and audit services listed above often involve third-party contractors, and can add on, typically, $10k to $50k to the final priceÂ tag
- The majority of costs come from services and features, rather than a qualityÂ product
Using contractors, a custom-built solution could range from a budget-friendly $15,000 to a pricier $100,000, not including your own staff salaries, marketing costs, legal costs, or post-token crowdsale tasks.
But the costs could be far greater. In addition to the expense of using a highly trained development team for six months or more, itâ€™s worth considering the potential security threats in this fast-growing space and if you have the experience to navigate a highly technical industry. Building your own token and smart contract is fraught with dangerâ€Šâ€”â€Šyou risk dragging out costs through auditing, testing, and unforeseen events, or worse still, creating a smart contract that isnâ€™tÂ secure.
On the other hand, a token creation platform can eliminate a number of costs, as well as a great deal of time. A market-ready solution is a great option for a time-poor startup, particularly one looking for guidance and a way to lower risk in a new industry.
At a minimum, this kind of ready-made token solution shouldÂ include:
- Token creation, management, and technical implementation
- Smart contract creation and execution
- Strong customerÂ support
- Built-in auditing
- The ability to work on at least one major blockchain
Again, you need to consider marketing costs and how you will build a community to support your token crowdsale. All solutions involve some kind of upfront fee, but prices vary widely, from barebones kits at $5,000 to ongoing solutions that demand a share of token success as well as $100,000 orÂ more.
Finding a platform that offers professionalism, high security standards, and ease of use will enable you to launch quicker, without dragging out costs or risking the success of yourÂ project.
Fuel Your Blockchain Project withÂ Rocket
Given the costs involved, getting your token crowdsale up and running as soon as possible should be a priority. Thatâ€™s why Etherparty launched Rocket, the worldâ€™s first user-friendly, smart contract creator designed to simplify crowdfunding.
Rocket is a token creation platform designed for entrepreneurs and blockchain business owners who need to get their project off the ground. Secure and simple to use, this all-in-one platform lets startups launch and track a token crowdsale without requiring a development team.
Created and supported by experts in blockchain programming, Rocket is a fully audited solution that drastically reduces the technical and development costs associated with token crowdsales. It achieves this by removing costs associated with:
- Development: As a ready-made solution, Rocket eliminates the need for blockchain coding expertsâ€Šâ€”â€Šone of the biggest costs associated with token crowdsales
- Auditing: Rocket is fully audited, eliminating a further $10k to $50k from yourÂ budget
- Marketing: The solution includes a simple, secure landing page where you can market your crowdsale, which includes a featured listing in the active Rocket marketplace
- Tracking: Access live statistics from the smart contract regarding the token crowdsale
- Support: An expert team is on standby, ready to help out with anyÂ issues
But beyond the cost savings, an all-in-one solution like Rocket offers something less tangible, tooâ€Šâ€”â€Špeace ofÂ mind.
Contact email@example.com to find out more and sign-up for a free trial of Rocket by Etherparty, the user-friendly platform that lets you set up, launch, and track your token crowdsale without a development team.
How Much Does it Really Cost to Launch a Token Crowdsale? was originally published in Etherparty on Medium, where people are continuing the conversation by highlighting and responding to this story.