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After a tumultuous year for initial coin offerings (ICOs) startup founders and
investors are looking at different ways to raise funds for innovative ideas
without getting caught up in the volatility and regulatory challenges of the
Increasingly, the market is turning its attention to security token offerings or STOs. STOs
are a blockchain-based funding mechanism where the tokens represent traditional
securities, like stocks or bonds. The advantage is that STOs are more likely to
comply with financial regulations in different parts of the world and may
attract institutional investors through a framework that’s more familiar to
STOs are fundamentally different from ICOs, which means startups need to modify their public relations and marketing strategy to suit this relatively new framework. Here are the five rules of effective STO PR:
1. Know your audience
The average STO investor is more likely to be a sophisticated financial firm or an
accredited investor. In most countries, financial securities are tightly regulated
and restricted to a pool of investors who either have more resources or more
experience than the average retail stock trader. Understanding this audience is
imperative for a successful STO PR strategy.
Take the time to speak with family offices, hedge funds, pension funds, and government
regulators to get a sense of how traditional security offerings are marketed.
If possible, hire someone with a consulting or Wall Street background to get
your project started off on the right foot.
2. Comply with regulations
STOs allow your startup team to access massive pools of funds from heavyweights in the
investments world. The associated regulatory and compliance burden is the price
you pay for this access.
Unlike ICOs, tokens issued as securities can only be marketed a certain way, through a
certain channel, and for a certain period. Regulators usually ask for
verification and a thorough background check of each issuer and investor. It’s
your company’s responsibility to prove your team is trustworthy, not involved
in any litigation, and free of potential conflicts of interest.
3. Be transparent
Simply getting through the regulatory hurdles isn’t enough. Every institutional
investor will have their own set of due diligence procedures which you must
also comply with in order to establish trust.
Be well-prepared with a book of accounts, registrations, and proof-of-concepts
before you meet any institutional investor or investment bank analyst. If
you’re asked to provide further proof, try to arrange it and make it as
thorough as possible. Transparency and rigid rules are what set STOs apart from
the murky world of ICOs.
Every STO team is looking for indications that your startup team has the requisite skills
to make the project a success. With this in mind, it’s important to project
professionalism when dealing with investors before and after you launch your
STO. For example, hire a virtual assistant to answer your phones and manage
meetings, hire a communications or STO PR agency to manage the way you
communicate with stakeholders, consult your lawyers before you draft
disclaimers and statements to the SEC, FINRA, or other regulatory bodies.
5. Interact with the community
There are certain restrictions on how you can market a security token, which means you
may have to rely on your STO PR agency to arrange for tickets to investor
conferences, family office roundtable discussions, and financial analyst
roadshows. Reaching out and interacting with the financial and investor
community is a crucial part of an effective STO PR strategy.
EAK Digital is a leading Global Blockchain PR Agency that works with Blockchain start-ups to help them gain mass media coverage across both mainstream and crypto publications alike.