What is the difference between a business plan and a White Paper for an ICO?

Everybody’s talking about Initial Coin Offerings (ICOs) lately. If you’ve been sleeping in the past few months, ICOs are a way for a company to offer crypto-assets to the public in order to raise funding, and many startups have been doing just that to raise initial capital, often instead of raising angel or VC rounds (side note 1: that’s not exactly true, but that is an article for another day).

There are many different aspects to performing a successful ICO (see SirinLabs’ recent $157.8 million ICO), but I want to take a look at the core document that is provided for the company’s investors – the white paper.

What is an ICO white paper?

A white paper is a document that details all the relevant information for anyone who is interested in purchasing a crypto-asset. White papers have existed for ages, but until recently were used mainly to detail technical data and use case investigation for technological products.

Offering a crypto-asset white paper is a tradition that started with Satoshi Nakamoto’s nine-page white paper, which was a detailed support manifesto for the original bitcoin currency. Since then, any company that issues a new crypto-asset have pitched their new offering using a white paper.

(Side note 2: like any document, white papers can be professionally written, or can be a haberdashery of crypto-slang that was purchased on Fiverr.com and is not worth the virtual paper it was published on. In this article I will only comment on the former version).

So, it’s a business plan?

Yes and no. There are many similarities between a white paper and a business plan. Mainly, they both need to convey the essence, plan, and uniqueness of the company to the reader. However, there are also many differences.

Ok, so how are white papers and business plans different?

Let’s start with the similarities. Both a business plan and a white paper must address five major aspects of the underlying business:

  • The need / problem – why does anyone need another crypto-asset. How will it solve an existing problem, or make our lives better?
  • The Solution – how are we solving this problem and why are we doing it with crypto-assets (or blockchain in general).
  • The Team – who are we, why are we uniquely qualified to do this?
  • The Market – who will be using our solution, how big is the market? How many users are there? How are they segmented?
  • The Competition – what other solutions may be solving the same problem? How are we doing it better?

However, even when the two are similar, the business plan and white paper actually address different aspects of the same coin (pun semi-intended). A business plan will focus on the company and how it creates value by addressing the need in a specific market. The white paper, on the other hand, must focus on the crypto-asset, and how it will create value which may not be directly linked to the issuing company. For example, in a white paper about a coin used for car sharing, the business plan will focus on the company providing the software to enable car sharing while the white paper will need to focus on the drivers and riders and their interaction using the crypto-asset.

This is also where the similarities end. In order to convince (e.g., put their mind at ease) investors and coin purchasers that the new crypto-asset offers an amazing investment opportunity, the white paper must address several other issues, including (and this is in no way a comprehensive list):

Technical

  • What is the platform the crypto-asset is using, and how is it using it? In the case of blockchain infrastructure this segment must be extremely detailed to convince readers why a new infrastructure is actually needed and how it will work better than existing infrastructure.
  • How are new crypto-assets issued (mined? minted? Pre-offering)?
  • How are the crypto-assets protected? What’s to prevent people from stealing/copying/duplicating crypto-assets?
  • How do the asset-holders hold, sell, buy, and transfer the crypto-asset?

Business

  • What are the different use cases for the crypto-asset? How will they change and grow over time?
  • How does the crypto-asset interact with other existing businesses and crypto-assets?
  • Has the underlying product or service launched? If not, why not and when?
  • Who are the existing miners, node-operators, or stake-holders in the underlying blockchain? What is their incentive structure?

Economical

  • How many coins are there? How many are planned? What is the issuance model?
  • What are the blockchain economies here – what will create new value for the crypto-asset and how?
  • What is the ecosystem for users, merchants, and traders? How will it grow and expand? What is the company’s stake in making this happen?

Financial

  • What are the terms of the ICO? How much is pre-allocated to the team and what for?
  • What size of fund raise is needed to make this vision into a reality?
  • Who are the early investors and how much was pre-sold at what terms?
  • Are there any guarantee structures?

Wow, that’s a lot

Yes. And that is just the proverbial tip of the ice berg. Writing a good white paper is about providing information. The more information you have, the more the educated investor feels comfortable purchasing your crypto-asset.

However, just like a good business plan, a white paper should be readable, tell a store (albeit a more technical story), and highlight the company’s strengths and vision.

Takeaways

What can you do with all this information? First off, do not treat the writing of your white paper lightly. This is a serious endeavor. Do not think that by shelling out $100 on fiverr.com you will have a document that is sufficient to raise $10 million and above. Second, write your white paper (or have a professional write it for you), and make sure you are addressing all the key issues.

 

 

 

 

Why Israelis Suck at Lean Canvas

TL;DR

Lean Canvas is popular. It’s used to create a good strategy by breaking the business down into topics and challenging assumptions. The more time and effort one puts in it, the more value is created, and the main derived benefit is expertise in your business. Israelis are results-oriented, not process-oriented, therefore it is no surprise that Israelis suck at Lean Canvas. When an Israeli entrepreneur sees a Lean Canvas he tries to complete the page ASAP with little or no regard for depth. This hurts the entrepreneur in the long run and prevents generating any real business understanding. Bottom line, Israelis: leave the Lean Canvas alone and go back to writing full business plans.

What is a Lean Canvas?

The Lean Canvas is a popular term that everyone is using.
When you Google it, you see a single page that maps out many key elements of the business.

When you read about it, you learn that it’s a tool for the Lean Canvas process which is supposed to be a fantastic business tool.

What is its purpose?

The purpose is to create, and fine-tune, an investable strategy for the business.

At first, the Lean Canvas process seems easy – it’s just one page that needs to be completed, but that’s not how it works.

How does it work?

One is supposed to identify all the business assumptions, question them, and then validate or change them. Once done, everything is put back together in a way that makes more sense.

Business assumptions exist in all topics: need identification, solution usage case, target market, customer definition, business modeling, pricing schemes, distribution channels, and marketing.

Each subject is broken down into its many moving parts.

Is it hard?

The deeper the process, the more valuable it is. When done right, this single page represents hundreds of hours of thinking, analyzing, and validating.

When a lot of background work goes into the canvas, then the page only represents a fraction of what you know. The knowledge behind the canvas is immense.

When this is done seriously and systematically, this process will lead to many benefits.

So yeah… it’s hard.

What are the benefits?

  • A management team with members that are true domain experts in their business
  • Noticeable expertise in interactions with investors who know the space
  • Better decisions in running the business
  • A clearer understanding of options and choices along the journey

The Israeli entrepreneur’s undoing is being results-oriented

Israeli entrepreneurs are some of the best in the world. There have been so many startup success stories made-in-Israel that it has enhanced Israel’s national pride.

If you would put the Israeli entrepreneur’s DNA under a microscope you would find a results-orientated chromosome rather than a process-oriented chromosome. Don’t believe me? Try managing Israeli’s and then lets talk. Israelis thrive under high-pressure deadlines, not under what they consider to be bureaucratic processes.

Israelis are amazing at coming up with effective ad-hoc solutions to problems.
Israelis are not built for systematic process-oriented tasks.

So why is Lean Canvas a disaster for Israelis?

The Lean Canvas process is well… a process. When an Israeli sees the Lean Canvas, he doesn’t connect to the process; instead, he tries to complete the page as quickly as possible.

The goal of the Lean Canvas process is to create depth and understanding; it’s not a race to fill out a page.

Being results-oriented and not process-oriented is what makes Israeli’s suck at Lean Canvas.

What should Israeli entrepreneurs do?

One thing:

Israeli entrepreneurs need to write a 25+ page quality business plan.

Why?

This will force a lean-canvas-like process by focusing on the result and ignoring the process.

A by-product of the long-form document will be the strategic depth that makes one investable.

Lessons from 10 years of writing business plans (part 2)

It’s been ten years and 300+ business plans since I started writing business plans and looking back I have gained some insights about the process (and art?) of creating these ubiquitous document, no matter their form: executive summary, one-pager, investor presentation or strategic plan. Specifically, I have come to believe that a successful business plan comes down to nailing three (it’s always three, huh!?) major aspects: balance, storytelling, and attitude. I covered all matters of balance in part 1. This means it is time to talk about storytelling. Continue reading “Lessons from 10 years of writing business plans (part 2)”

Lessons from 10 years of writing business plans (part 1)

I’ve recently looked back on my career (so far) and was somewhat surprised to discover that I have been in the business of writing business plans for almost a decade now (even more if you take into account business plans I wrote for myself for businesses I started 15 years ago). This seemed like a great opportunity to think about what the process of writing business plans has taught me over the years, and how it has changed both for me and for the industry as a whole during this period. Continue reading “Lessons from 10 years of writing business plans (part 1)”

The Two Worst Business Plan Mistakes and How to Fix Them

The common thinking today (so I am told) is that startups don’t need a business plan. That is misleading. While the formats (and attention spans) may have changed from long to short, chances are the first interaction with any investor will involve emailing some variation of your business plan.

Weeding out bad business plans is the investor’s first line of defense for weeding out bad businesses. Continue reading “The Two Worst Business Plan Mistakes and How to Fix Them”

Call Now ButtonCall Now Skip to content