Security Token Offering (STO) is for sure one of the safest methods to conduct crowdfunding for your blockchain project. Nevertheless, if you decide to go for an STO, you have to be ready for the strict regulations that go along with it.
Security tokens are normally backed by real assets, therefore they have to comply with the US Securities and Exchange Commission regulations. Therefore, before marketing your STO, you have to ensure that you have fully complied with all the required rules to avoid being on the wrong side of the law.
Once you start marketing your STO, your project becomes known by many including the authorities. If the authorities get wind of your project and you have not complied with the set rules, you can be sure you will not like the repercussions.
Therefore, before marketing your STO, you have to adhere to a number of prerequisites generally referred to as general solicitation which allows any security issuers to solicit and advertise their offering widely. The conditions that must be met include:
- All the purchasers of the security tokens in the STO should be accredited.
- The token issuer must take all the required steps to confirm that the investors are accredited.
- For US issuers, all the conditions provided in Regulation D must be satisfied.
To understand what Regulation D entails and how it influences STO marketing, let us have a look at it.
Rule 506 (b) of Regulation D states that a company can be assured of exemption from Section 4 (a) (2) by complying with the following:
- The company should refrain from general advertisement or solicitation in order to endorse the securities.
- The company offering the securities can sell its securities to a limitless number of accredited and verified investors and up to 35 extra buyers.
- The company should ensure that it gives the accredited and verified investors the correct information to avoid misleading information.
Therefore, for a company to solicit and market its security token offering, all the investors must be accredited and it must take all the necessary measures to confirm that the investors are accredited.
STO marketing depending on the STO development stages
- Initial Stage
These are normally the things that one should do to ensure that the general public is aware of the project and STO. The activities under this stage include:
- Writing a whitepaper
- Coming up with a one-pager
- Creating a responsive website
- Simplifying your project idea to interested investors
- Blog writing about your project and Search Engine Optimization
- Guest posting
When writing the whitepaper, you should ensure that you clearly explain your project and also lay out all the regal compliances for the STO. Furthermore, it should give a detailed technological, financial and commercial overview of a security token. Therefore, you ought to look for a professional writer who clearly understands about STO whitepapers.
The one-pager, on the other hand, is a one-paged document which is actually a summary of your project, giving clear reasons as to why investors should invest in the project.
For STOs, the websites created for the projects should be HTTPS sites to ensure that they are secure.
- Pre-STO stage
This is the stage just prior to the launch of the STO and the marketing team should ensure that word about the STO has reached as many people as possible. Some of the most commonly used marketing strategies used at this stage include:
- Press Releases and Media outreach
- Getting High Domain Authority backlinks
- Getting the STO listed on STO listing websites
- Creating profiles on professional websites like LinkedIn and CrunchBase
- Social media marketing (using platforms such as Facebook, Twitter, Reddit, Telegram and Steemit)
- Running video campaigns depicting use cases
For the Press Release, you can pay for articles to be written and published on websites, especially those that you are sure that they receive a high amount of traffic. You can have some of those articles posted on High DA websites with backlinks to your website.
Listing your STO on popular STO listing websites like ListICO, InitialCoinList, and CoinIntelligence also go a long way in ensuring that investors looking for prospective STOs to invest in easily find you. When listing your STO on such a website, you should not forget to include the following:
- A summary of the entire project and why investors should cash in
- Link to the website of the projectLink to the project’s whitepaper
- All the regulations that have been applied to the Security Token.
- Know-Your-Customer and \Anti-Money Laundering Regulations
- The specific STO Launch date
- The Roadmap of the entire project
- STO running Stage
At this stage, the STO has already been launched and it is running meaning investors are flocking in to invest. Though not much awareness can be done in this phase, the marketing team should ensure that they are able to catch the attention of every investor that comes across the STO.
Some of the most effective methods used include:
- Carrying out Airdrops of the security tokens
- Building on the project’s credibility via networking
- Deal marketing
- Contributing to related forums
Nevertheless, these activities should be done in moderation to ensure that the main goal of raising funds for the project during the STO is maintained. For instance, when carrying out airdrops, you should refrain from giving away too many free tokens since it would compromise the amount of funds you shall receive during the STO.