Fundraising for business

Every big crypto project, be it a platform, an NFT marketplace, or dApp, starts with fundraising first. And while traditional ways to raise funds might not be relevant for crypto projects, an alternative was found. Token fundraising, or offering, is a way to raise funds for further project development and attract a wider audience of investors.

Let’s review how it all works because there are many ways your crypto business can raise funds for further development.

The most popular crypto fundraising methods today

all started with ICOs (Initial Coin Offerings). ICOs were held on the project’s website, and sometimes they would fail. Furthermore, there were no regulations about the transparency of this fundraising method, and there were even some cases where the project reached its fundraising goal via ICO and turned out to be a scam.

Anyway, ICOs are now mostly left behind as more sophisticated crypto fundraising methods emerge.

IEO

Initial Exchange Offerings, the opposite of ICOs, IEO Initial Exchange Offerings are hosted by crypto exchanges. A crypto fundraiser applies for IEO, and their crypto token sale starts. The crypto exchange platform benefits from it, receiving a fee from the number of tokens that are sold, and after the fundraising is over, the project gets listed. 

IEO is a more legitimate way to raise money for a crypto business startup. Also, the crypto fundraising platform facilitates the token sale, so your team won’t have to worry much about sales. It’s generally a user-friendly experience that benefits every party: a startup, the exchange, and crypto investors.

IDO

IEOs are great for launching a safe fundraising campaign for everyone involved, but the format is unsuitable for some projects. While IEO is a completely centralized process, some projects needed decentralization to simplify the transactions. Enter the IDO ‒ Initial DEX Offering. Unlike with IEO, the crypto exchange platform, in this case, acts only as a launchpad while all transactions are peer-to-peer. 

It works like this: the project that wants to fundraise on crypto launchpad fills an application first. Next, if the project complies with the platform’s and community requirements, its tokens are issued on the decentralized exchange platform. Unlike IEO, IDO doesn’t require the identification of the project owner or sophisticated background checks.

You can think of IDO as a hybrid between ICO and IEO: your tokens can be distributed via peer-to-peer transactions, but there’s an exchange behind them, providing a safer environment. Also, after successfully ending an IDO, the exchange platform hosting the launchpad almost immediately lists your token, taking it to the next level of the crypto market. For example, the P2B launchpad hosts IDOs and lists successful projects in three days while providing them with market-making and marketing services.

Fundraising for business: what model to choose?

When choosing the best option for your crypto business, it’s important to build credibility first. The project can seek initial support from individual investors before applying for a fundraising campaign. This is also a great opportunity to develop a better project ecosystem and get featured in a few headlines of crypto-oriented media.

This way, a project can get a better awareness before the launch ‒ think of it as an extra trust point that eventually reflects on the starting price, increasing it for the presale round. The next step is IEO or IDO. ICOs are not recommended for dApps these days as this fundraising method provides less credibility and higher risks for investors. Also, running an ICO always means investing more money into the marketing campaign.

On the contrary, IEOs and IDOs help your crypto project build credibility and expand your customer base nearly inertially. Those launchpads already have their loyal community and customer base, and raising funds on a centralized or decentralized exchange platform is generally more beneficial than launching an ICO.

Choosing between IDO and IEO is individual for every project. For dApps, IDOs are a better choice as they provide decentralized token exchange while still having an exchange platform promoting the project to its community. If you want to launch your crypto project on a budget, your best option is IEO, as the exchange, in this case, provides your token with marketing services. 

The outcome of IDO or IEO, ultimately, is getting your token listed successfully. When entering a tier-two exchange, it has proof of token liquidity, allowing your project to grow and attract new investors.