A Guide to Running a Successful ICO in Six Steps

Many teams that come to Crowdbotics seeking technology help for blockchain development have basic questions about the process, timeline, steps involved, and costs. Even as this becomes a more popular alternative to conventional fundraising, teams often have difficulty finding reliable public information about how this process works.

That’s why we’ve compiled a handy guide to the process.

We’ve provided support for a number of teams who’ve collectively raised tens of millions of dollars, so we’ve had a front-row seat to several successful ICOs.

If you’re thinking about running a token sale, either as part of financing a new venture or to augment an existing system with new tokens, these are the standard steps you should review.

I suggest going down the list in the order below. Usually we see successful teams take 4–6 months to complete the entire list here. I’ve included expected cost and the folks we typically refer customers to in order to cover the bases. Crowdbotics can help with the technology development, and we can introduce you to included recommended resources for the rest.

Costs range dramatically depending on the scale and expected impact of your ICO. Teams can spend anywhere from $25K‐$300K each for initial marketing, technology, and governance spend. Many costs can be deferred to post‐ICO. The total legal costs of a full SEC‐registered security sale can range from $100K to $1M; SEC‐exempt security sales can be done for as little as $20K to $75K.

The 6 Key Steps of A Successful Token Sale (In Order)

What jurisdiction should you use? How should you approach regulators?

2. Capital Planning and Buyer Validation

Will you go to conventional VC as part of your raise, or just to the users of your token?How do you get money to pay for a token sale? Should you do a pre-ICO?

3. Governance / Token Economics / White paper

How will your new token function? How many tokens will be issued? Why does this token need to exist and why is blockchain the right solution? What protocol should you use?

4. Technology Development

How will you issue new tokens and verify anti-money-laundering requirements? Who will write the smart contract and wallets? What infrastructure will you use for deployment and maintenance?

5. Team (Advisory, Core, and Infrastructure)

Who will serve as your key team members? How do you hit your product milestones on time ?Who do you call when something breaks?

6. Marketing & Distribution

How will you run promotion, airdrop, communication, and community management?

Below is a short overview of considerations and resources for the first four stages, as well as cost breakdowns for your token sale. We’ll address the last two in a subsequent article.

Major tech law firms — such as, WilmerHale, Wilson-Sonsini, Gunderson, etc. — now all have partners who focus on blockchain.

A few of the things you will need to determine in advance of an token sale include:

  • Will your token be a utility token or a security?
  • How will your legal entity be structured? (A Delaware C-Corp? A Swiss or Cayman Islands nonprofit foundation? Hybrid structure?)
  • What fundraising instruments will you use when dealing with investors?
  • Will you provide tokens only to accredited investors or to a broader segment?
  • What custodial entities will you use to hold tokens?
  • If you’re a security, will you formally register with the SEC?
  • If you’re a security, how will you comply with AML/KYC rules?

The regulatory landscape governing token sales is rapidly evolving. The SEC has recently agreed with the blockchain community’s perspective that tokens are not always securities, but in many ways the community and practicing lawyers are still ahead of regulators.

Wilson-Sonsini offers a good overview of what is known, and what is not known, when it comes to how various token types should be used as a fundraising mechanism.

If you’re on the road to a token sale, don’t delay seeking legal expertise. You’ll likely learn more and get better advice in a single meeting than several days of web research. Initiating these conversations early on will help you prevent resource-draining legal entanglements down the road. Having good legal representation is vital prior to a token sale to ensure you’re not in hot water with regulators and will ensure your team avoids any personal liability.

It’s no secret that top law firms are expensive. However, an initial consultation is often free to see if there’s a good match. When you do choose to work with a given firm, many will wait to send you your first bill until after you’ve raised capital. Billing can usually be negotiated to accommodate your cash flow needs.

Because this is new territory, legal fees for SEC-exempt security sales can range from $20K to $75K, which is comparable to the cost of a traditional Series A financing. Be prepared to budget $10K-$30K of the initial amount raised in a presale for initial legal expenses.

If you go the more expensive route with a SEC-registered token sale of a popular / multi-million token sale, you should expect legal expenses over the course of your launch to range from $100K up to $1M.

For some businesses, a simpler SEC-exempt 506(c) token sale is an option. In this situation, tokens are issued only to accredited investors and are treated as “restricted securities.” The legal expenses for a 506(c) can be as little as $50K for a full sale.

If you’d like any introductions to partners at big tech law firms working on blockchain regulatory issues, shoot me an email and I’ll introduce you. We can recommend the following:

  • Peter Buckland at WilmerHale (very hands-on, service-oriented),
  • Robert Rosenblum at Wilson Sonsini (publishes extensively on these topics)
  • Matt Kirmayer at PerkinsCoie (does a large volume of large-scale ICOs, but selective on clients).
  • The legal tech startup Atrium (has a separate blockchain desk, reputed to do fixed-price operations, selective on clients)

2. Capital Planning and Feedback

With a clearer sense of the regulatory landscape, you will be in a better position to decide who to approach first for your token sale. The basic strategy you develop with legal will be one of two options:

  • taking funds from conventional venture capitalists first
  • offering the token directly to target members of community who’d purchase, hold, or use your token.

Before choosing between these options, you should get feedback from members of both groups.

Raising from conventional investors — while slow and difficult — builds credibility that can boost the chances you’ll be successful when you do a larger token sale. More importantly, whether or not you take capital after meeting with VCs, you’ll get valuable feedback in a private setting that will help you shape the messaging for your public token sale.

The largest token sales and ICOs in recent months all raised from established VCs prior to going on to the broader public. Many early-stage VC funds are betting heavily on blockchain, including Bee Partners, Polychain Capital, Initialized, and Andreessen-Horowitz.

Getting feedback from members of the community who’d buy or use your token is a requirement. Crypto communities on Reddit, Bitcointalk, and Telegram are a good place to start, but you should also ask trusted folks from the general population who might use your token.

Some teams are curious how much they should budget.

  • You will need enough capital to finance development of your token and associated software infrastructure, marketing & distribution of your token and distribution into an ecosystem, legal fees, ongoing operation and team salary.
  • Plan for at least 18–24 months’ operating capital to avoid needing to raise more too soon.

If you’re reviewing the costs here and thinking they seem infeasible, you’re not alone. Because ICOs are so expensive from a legal, technology and marketing standpoint, many teams now start with a pre-ICO where they announce to a smaller audience and raise enough to cover initial technical and legal expenses as a ramp-up for a larger ICO. This is also a good way to test whether your traction will be sufficient in a larger token sale.

3. Token Economics & Governance

You’ll likely have heard of the importance of a white paper to a successful token sale. The white paper is merely a means to an end: it describes the purpose, the economics and governance of your tokens and underlying blockchain protocol. White papers also include a detailed technical description of the project and the development roadmap and key milestones.

You’ll need to determine and describe details around elements like:

  • Distribution of tokens to various parties
  • How and when additional tokens will be issued
  • Which fraction of tokens will be held by various parties in the ecosystem
  • Technical considerations of commercialization
  • Which model for blockchain consensus you follow — proof of work, proof of stake, proof of burn or something else.

There are two groups we work with who do a good job helping blockchain companies answer these questions.

  • Vite.Money — Christian Duffus has been an early advocate in the cryptocurrency space.
  • Blox7.com — Strong boutique operation run by professional consultants.

These groups quote $10K-$30K for an ETH-based rollout. Shoot me an email if you’d like an introduction to either of these.

4. Technology Development

Once the plan is in place, the hard work can begin of actually rolling out the technology and promised tokens. Most successful token sales commit a series of milestones and releases to their community on a tight timeframe. Achieving those milestones requires good decision-making around technology infrastructure.

Essentially all teams end up with much more technology work than they can handle on a short time frame with an internal team of engineers, so it’s vital to plan which pieces you can hand off in advance of a new technology project.

Creating a brand-new blockchain protocol is exceedingly hard and not something a team can plan to give to a third party: it’s on par with coming up with a new machine learning algorithm or patentable invention. However, most of the rest of the process can be handed off – creation of the token sale contracts, issuing and deploying new tokens, managing AML/KYC checkout processes, designing and creating token sale pages, configuring decentralized applications that use your token with Metamask or other smart contracts, creating testnet / staging and production flows, and new secure node creation.

When doing an Ethereum-based rollout in Crowdbotics, around 75% of the technology can be assembled directly from modules we provide to customers, allowing around 50%–80% faster build speeds as compared to doing it from scratch.

Building Blockchain Applications with Crowdbotics

Crowbotics provides end-to-end technology infrastructure and direct engineering support for soup-to-nuts blockchain development, wallet and testnet creation, new token creation and deployment. We support a number of protocols, though Ethereum and ERC-20 tokens are our preferred choice.

We’ve assembled a significant amount of tooling to accelerate the development process. Moreover, we provide the only few scalable on-demand expert blockchain developer teams available anywhere.

Some of the key pieces Crowdbotics can help you with:

  • Core blockchain token & application development on Ethereum, Stellar, Hyperledger.
  • AML/KYC workflows
  • Configuration and deployment of test and production-network tokens.
  • Developing continuous integration paths for decentralized app development
  • Defining, developing & auditing smart contracts.
  • Interfaces to your smart contracts for the web
  • Dapp development
  • Web or mobile platforms for use of a utility token.
  • Documentation, naming, reserve price administration, purchasing location, and purchasing processes
  • Software for token sales, wallet administration, and verification

For a routine Ethereum-based token sale, you should budget a minimum of $10K/month for the platform itself, $30K-$60K in spend for token setup, wallets, and contracts, as well as $20K-$50K for a token sale page, checkout process and KYC/AML.

Crowdbotics always give you estimated costs and timelines before starting work, and provide on-demand help as you need it by the hour.

For blockchain companies, the largest resource savings can be gained by just avoiding simple mistakes. Blockchain is an emerging technology, but there is still plenty of opportunity to learn from the successes and failures of existing blockchain businesses. Making wise business decisions early on is the first step and most important step on the road to a successful token sale.

Visit Crowdbotics.com to start building blockchain applications and supporting blockchain software.

Special thanks to those who reviewed and commented on early drafts of this post: William Wickey, Sebastian Leon, Kira Noodleman, Tim Smith, Saad Iveri, and Julian Capps.


"Costs range dramatically depending on the scale and expected impact of your ICO. Teams can spend anywhere from $25K‐$300K each for initial marketing, technology, and governance spend. Many costs can be deferred to post‐ICO. The total legal costs of a full SEC‐registered security sale can range from $100K to $1M; SEC‐exempt security sales can be done for as little as $20K to $75K."