At today’s CV Summit 2019 in Zug, Switzerland, Jose Maria Macedo, AmaZix Partner and Head of Advisory, was part of a panel discussion on ‘Digital securities, STOs and the future of financing’, where he shared some insight into AmaZix’s go-to-market strategy for token offerings.
Identifying the sales process
A token sale isn’t much different from any other type of sale — the token is a product that projects are trying to sell to investors, who themselves are clients. As with a regular sale, clients are convinced that the price they’re paying for the product is less than the value that they’re getting.
“For you to do this successfully, you have to make sure that the cost of persuading them of this is less than what you’re taking in from them,” says Macedo, who explains that the token sale process, like a regular sale, is split into three parts.
“First you identify your target investors, then you decide what story you’re willing to tell this target investors, and then finally you get to the part where you figure out how to get that story in front of these target investors.”
The final leg of that process, according to the AmaZix partner, is the typical focus for projects. But he insists that it is the initial groundwork for the first two parts of the sales process that requires the most attention.
Reverse engineering due diligence
In the context of the current market landscape where retail investors are unable to bring enough liquidity and where institutional investors are driving the narrative, Macedo recommends the AmaZix approach:
“Let’s reverse engineer the work that the best — most prominent — institutional investors will be doing in analyzing your project and making sure that you pass all the tests that they’ll put you through with flying colors.”
Through the experience of working together with over 120 token sales and raising some $1.3B, with a team of analysts with expertise in finance, economics, computer science and game theory, AmaZix has developed an exhaustive internal checklist. This ensures the firm is able to conduct in-depth preparations to satisfy the most demanding due diligence that institutional investors will expect.
“The first one (of the checklist), is documentation… obviously, you’re always telling the same story. You know, the problem, the market context, the solution, why you’re the right team to do this, how much money you’re going to make. But, the way you tell the story, how’s it change, based on who you’re talking to. Institutional investors require institutional-grade documentation. They’ll expect sensitivity analysis, risk analysis, and all these stuff. Retail investors, less so,” says Macedo.
He also spoke about the importance of assessing the legal side, ensuring that projects have the right legal structure in the right jurisdiction for the business processes they plan to embark on. In addition, having a proper evaluation framework as part of sound token economics was a standard benchmark item for token sales.
He says, “And finally, once all that groundwork’s in place, you have the marketing, which is just figuring out how to tell that story that you just crafted and how to get it in front of investors. And that’s kind of the easy part once you’ve done the rest of it!”
Watch the full video here.
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