We are a research organization which disseminates key information and sources of information about the ILO sector. We want to bring about awareness for a growing market place that has yet to define its role or produce leaders that will command the arena.
Qualifying & Costs
To create an ILO you have to qualify with a reputable ILO providing platform. Websites such as ILO quote and ILO Exchange can run the numbers and confirm whether a company can start the process. Companies must provide a number of documents to prove that they are both revenue-ready and can stand by their predictions for future revenue over the next three years. These documents include business plans, company registration papers etc. Due diligence and other checks are performed by the ILO service provider.
A term sheet will be generated that is specific to the company, fitting its revenue model, figures and product. A green sheet is created along with a documents once the company has been qualified and registered. These must be signed by company owners and/or the board before an ILO can be listed.
The cost to list an ILO ranges between 25,000 and 50,000 USD. If a company is struggling to find the initial listing fee there are new funds arriving that can help such as ILO Capital.
A Welcome Pack is created for ILO buyers which includes all promotional material needed to qualify their ILO. This can include but is not limited to banner adverts, pre-written copy, links, referral codes, discount codes and more. There seems to be a lot of scope as to what this pack can include. The more creative the company can be with their ILO offering the better.
Campaign & Launch
It is a stipulation from all ILO providers that a company must have a campaign for launch. Although the exchange promotes ILO offerings to their user base it is vital that the company realises the main responsibility to promote their ILO rests with them. Some websites offer help with this where needed. You will also find sites now offering specific ILO campaign strategy work such as PROMOILO and ILOSocial.
Some exchanges offer a pre buy-in round for friends and family at this stage before the ILO goes public. This could also be used to sell ILOs to loyal customers first via email campaign.
ILO buyers Qualify
ILO buyers must qualify their ILO by sharing the information provided in their Welcome Pack to their social and real life networks. Buyers are encouraged to promote the company or product behind the ILO as much as possible as this boosts sales and therefore company revenue and ILO buyer royalties.
Reporting & Royalties
Once ILOS are sold the company begins reporting to the ILO facilitator or Listing Agent. News and updates must also be shared with ILO holders. This information often includes sales figures and projections however requirements will differ slightly from contract to contract. Companies must also use a percentage of money raised for direct promotion. Whether this is the promotion of the ILO or the particular product will be stated in the company's term sheet.
After year one, royalties are paid out. Percentages differ from platform to platform but the general figure is 10% of gross revenue. This is equally split between ILO holders. The value of an ILO at any given time will reflect the royalties being paid out to ILO holders. ILOs trade at multiples of 10 therefore if a royalty of $25 is paid out to the holder, the ILO is worth $250 on an exchange if the buyer wishes to re-sell. This has a knock on effect for companies offering a second release, as a proven track record will allow a higher ILO sales tag.