The Road From IPO to ICO Needs Some Common Ground

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After completing Germany’s fastest IPO in the last 15 years, NAGA, a German fintech company, decided to tap into the crypto market.

A firm usually takes the IPO route to raise funds so that they can build their business. But when ambitions become even bigger and you want to step into the crypto space, they tap into the ICO world. The ICO market is hot and it is imperative for firms to have a concrete plan in order to have a successful ICO. It has become a lot easier for firms to bluff investors who are facing the threat of missing the opportunity, especially when you see the ballistic moves in Bitcoin. One way to assure investors is that they understand the business model. By having a better understanding of the business, you can take the fear away and attract investors.

Firms holding an ICO will have a soft cap and breaking those caps within a short time frame shows they have strong investor base. NAGA, a fintech group, which holds a brokerage arm and social trading app, SwipeStox, raised capital earlier this year by doing an IPO. Their Token Sale is LIVE and it seems they are having a huge success: 20,000 backers that have invested more than $17 mln already.

Real value of the market

However, these days the market values when you have one exchange, one token and access to a number of products. They realized that a brokerage firm alone isn’t going to satisfy investors and users. The business model is simple; create an exchange through which traders can get access to investment products, exchange virtual goods, get access to education, and issue NAGA tokens. The firm will produce a wallet in which users can hold both NAGA coin and fiat currency, and users will also be rewarded for their loyalty in using the coin. The great thing about them is that their Telegram community is now more than 7,000 active members which is a positive sign for every project.  

The NAGA group figured out that they can use an ICO fund to build its exchange, trading academy, and a platform for virtual goods where one can buy and sell them. Through its brokerage arm, it can provide access to a vast amount of investments, such as ETFs, stocks, commodities and forex markets. ETFs are a great tool for investors who do not want to invest in highly volatile stocks.

The social trading app, SwipeStox, provides a compounded effect as it attracts new users who want to copy the trades of the platform’s best traders. NAGA has also used some elements of artificial intelligence, which are geared to better performance. It picks up traders with the best performance based on algorithms. However, the artificial intelligence part is underdeveloped but the ICO funding could help to upgrade the system.

Why ICO?

The strength of the ICO is in its ecosystem and tapping into the trading academy provides that. Bringing partners on board which work in the same business can resolve the problem. In the case of NAGA group, they partnered with a leading Cypriot educational institution and the products offered on this platform will fall within EU regulation. Finally, when a firm is working on an alpha platform for the buying and selling of virtual goods, bringing the same product to its exchange would help them. NAGA is going to use their Switex product which would serve in this market.

Thus, by aligning similar business and bringing them on the same exchange and issuing your own token, a firm which raised capital previously can easily walk into the ICO world. Having a successful IPO does give you reputation, but at the same time, it also increases the challenge for a firm to justify how they used their funds from the IPO. Investors need assurance and a valid business model to invest in the ICO and become part of their ecosystem. Money raised during NAGA’s IPO will be used to build their primary part of the business and the ICO model will help them to vastly expand their ecosystem.

Naeem Aslam