Written by Jori Falkstedt
The first words
The main reason why I wanted to write this article is not only to facilitate the success of the ICO finance for new businesses but to also clarify and unveil to the world at the same time how the crypto world looks behind the glasses of a crypto entrepreneur.
ICO as a crowdfunding form
ICO is a very new and rapidly changing form of crowdfunding.
ICO’s success as a crowdfunding form has been appalling. This is mainly due to its speculative aspect compared to traditional crowdfunding. It started out last year as an excellent way to collect financial resources, but it now became even more challenging than old-fashioned crowdfunding methods.
Currently, investors are simply no longer sufficient for all these thousands of ICOs since private equity investors are not yet in the crypto world at all.
I strongly believe that the cryptocurrencies created by new ICOs can be an excellent investment, but all the same rules in traditional business apply here as well. Just as in traditional crowdfunding, an investor needs to think about whether the business and the team is great or whether the company is solving a problem for the masses. There is another aspect that affects the investment profitability substantially.
Token value based on speculation should be a thing of the past instead token value must reflect the company’s true growth and success. The real need for a token in the purchase of a product or service together with a turnover of the company correlates directly with the value of the token.
I have seen ICOs with a good idea and team but the number of tokens for sale was set too high or more than what is needed. In such a case, the value of a token cannot be reached even if demand for a company’s products or services is demanded.
Another problematic situation is that, in addition to tokens, the company has another earnings model, ie the product itself is paid with fiat money and the token has a lesser purpose. In these cases too, the token reversal remains too small and no natural gains come in.
That is, to get your ICO enough to attract investors, you have to think carefully about what will be the real time of your token circulation in order for natural growth to happen.
How we chose our advisors
Since I had been an entrepreneur for more than 20 years, it was mentally hard to accept to pay someone for telling me what should I do or not to do. In this rapidly growing ICO-world, however, I found it was necessary.
When I chose advisors for our project, I sought to find advisors that would benefit us as much as possible.
I knew in advance that the role of the Advisor is not directly to bring money to our project, but to help in collecting it with the experience and the skills that each one has.
I wondered about our own weaknesses and I sought to find advisors who could fill in the gap and complement our disadvantages. The Advisor’s role is to act as a “big brother” in matters where he has more experience than we do. Advisors also often bring credibility to the projects but this aspect has, unfortunately, lagged far behind since many advisors have received almost as many ICOs as they can.
At first, we contacted Mr. Shaf Zaman. I had heard that Shaf had connections in Asia and although I have worked for over 10 years as an importer, I did not know a single Asian investor or ICO specialized advertising agency in Asia. We have three Asian employers and I heard from them that with the correct ad channels in Asia its possible to find masses of small investors if they like our project.
It was easy for us to agree on the contract with Shaf.
I have a clear idea on how to grow our company’s net sales from 2M EUR to 100M EUR. An important part of this process is marketing and press. So who could be a better Advisor for us than Simon Cocking who is Senior Editor at Irish Tech News, Editor in Chief at CryptoCoinNews, etc. as well as an accomplished public speaker in many large events. He has been also working with 20+ ICOs so he should know how all this works.
Cooperation with him has been excellent. I’m afraid that because our project is going fast forward and our company is in full operation, we have not had enough time to make the publications that he would certainly have liked to share in his channels.
As a third advisor, I wanted a superstar of the crypto-world that would have behind him successful ICOs and the longest possible history in the industry.
I have to say that this Advisory choice was by far the most difficult one. I contacted almost all the most famous advisors. Some of them did not accept our ICO at all. One said that our website is too low quality. This was enough for me because everyone knows that websites can be done by anyone and, in fact, I own one company that sells web themes (themezeus.com and ctr-themes.com). We just didn’t have the opportunity to make the best quality site at that time because we already knew that we need to create a whole new platform to handle thousands of AMP, PEP etc. verifications 24 hours to grow big enough.*
One told me we do not exist because we are not on Linkedin. What the heck? In Finland very few use Linkedin and none of my business friends are there. I have made an account a long time ago just for curiosity. So we all opened Linkedin accounts so that others will be happy in the future. Later, yes, I regretted that I was not very familiar with Linkedin in the past because it has been really useful for me now as a networking channel.
Luckily, however, many great advisors were interested in our project and eventually ended up with David Drake. David Drake’s history was impressive, and from the very outset of the first contact, the action was very convincing and professional. His team presented a plan on how to promote our ICO’s marketing and the tracking of each point was closely monitored.
David and his team quickly connected us with a very knowledgeable team. Their partner Silvana Da Luca organized for us a great dinner event at the Yale Club at the time of Consensus 2018 (which was a great dinner event and also very profitable for us). This was on the same trip David’s team organized for us two different crypto events.
We still have very close cooperation with David Drake and his team and I can only recommend his services to other ICOs. David Drake is assisted by a big team and their activities are well organized so they surely can handle many ICOs at the same time.
I can warmly recommend all my advisors to other ICOs as well.
Advisory as a job
Very few if any of us do this as a hobby. Everyone knows the basics of business and one of them is definitely a profit. Advisory activities are also a business, and each Advisor has to plan how to develop its services so that it will be as profitable as possible in the long term (or short term, like some may seem to unfortunately do).
Of course, one of the most common of their services is connecting companies to investors. There are many ways to do this. There are investor meetings, dinner events, crypto events and meetups, email, and more.
Should an Advisor include a profit for himself from these services? If you ask me, for sure, I would. Does an Advisor need to ensure that your investments in events and activities are profitable? No, but good advisor knows which could be profitable and which is not.
Another advisor source of earnings is in the form of fixed fees. Again, this is where the basic business is. Are you signing a contract that is profitable to you and who is responsible if it is not?
In my opinion, this is a very similar agreement with what companies are constantly writing. It is the CEO’s responsibility to sign a contract that is profitable for the company he leads. In my opinion, any advisor should not take on companies that they do not believe. In the long run, an advisor’s reputation falls if many of his ICOs fail.
My opinion is that if your idea is good enough, it will get investments even if it is presented to investors anywhere. Who would not want to invest in a great project while it is still in its very early stage knowing you can gain a significant profit from it later?
I have personally invested in a few ICOs and I have been thinking what made me invest just on that specific ICO. Was it because of their advisor? Surely not. But it might be something their advisor asked them to do and that activity assured me that this project is worth investing in.
And for other ICOs, I could say that the ICO is good enough if you do not want to sell tokens, but unfortunately it is necessary for the project to get the funding it needs.
Derivative problems that have arisen from the Advisor Business
Lately, I’ve noticed that along with the exponential growth in the number of ICOs and advisors, the increase in problems also escalated.
I have been following advisors’ posts on Linkedin that debate on what constitutes a good and effective advisor and some have resorted to labeling some advisors as scammers. The fight for customer sympathy and client loyalty seem to have created a cruel community within the industry.
I urge each of the ICOs to pay special attention to the agreements they are signing. You can always ask what an advisor is willing to do for you and whether they will incur additional costs.
If an advisor thinks your idea and business is awesome, they won’t let you run away even if you’re a bit more demanding.
Remember that you are the customer and the advisors are your service providers.
Personally, I believe that the best way to ensure ICO success is to show that the project is strongly and actively going on even during the ICO stage. It is the best way to show investors that the project is progressing and investor funds are safe in that respect. Also, it is a great way to show the power of your team.
*Our new company with its new platform and new ICO site will be published at the end of July 2018. After publishing our new licenced platform, it will be the only one that can perform up to a thousand verifications per day. Only document analysis will be done by our team while the rest of the processes from order to delivery is going to be fully automated.
Jori is a serial entrepreneur and founded many companies since 1997. Companies are still running with over 40 employees in Finland, Estonia, China, and the Philippines. Jori has been selling some of his companies forwards but still sits in the board of several companies and also serves as the Chairman of the Board at J2P2-Invest Oy.
J2P2-Invest Oy is a research company founded in 2012 and has been growing annually with up to 40% growth rate. J2P2-Invest is better known in the crypto world with its current name GlobalSpy OU, which is currently the leading provider of AML, PEP, KYC and different Compliance verifications in many different countries such as Malta. J2P2-Invest moved from Finland to Estonia in 2018 because Finnish laws on cryptocurrencies and ICOs are still not established, but in Estonia, legislation is clear.
After numerous meetings with the Finnish tax offices and the Financial Supervisory Authority, Jori has offered to operate free of charge as an advisor to these instances in order to reach the international crypto legislation of Finland.