Initial License Offerings (ILOs) offer several different paths to making money, we’ll cover the basics here: qualifying, royalties and trading.
Keep reading this guide to learn how to buy, qualify, and trade ILOs to make money.
The Rundown on How ILOs Work
ILOCX is an attractive ecosystem for companies looking to raise money, as well as people looking to help companies make money while receiving a fair pay cheque in return for their efforts.
Companies are attracted to ILO’s as a way to raise money and at the same time receive a huge promotional boost for their products, services or technology, without being required to give away any equity, ownership or control of their company.
ILOs buyers are attracted because they can actively benefit from their promotional efforts in companies they believe in, directly influencing the amount of money they make back from the company.
An ILO is a digitally stored license, agreed to by both the company and buyer. In this license agreement the company agrees to sets aside a set percentage of their gross revenue (their total sales), and the buyer agrees to promotes or otherwise help the company.
You may have heard people in the music or publishing industries talking about royalty cheques. ILO royalties are similar, where an artist would get paid for their part of the effort to make and sell their music, an ILO buyer gets paid for their involvement in promoting the company and paying the license fee.
Royalty percentages can be different company to company, ranging from 5%-30%, but they’re all calculated from the companies gross revenue. This means all the money the company makes from sales, before any deductions, even tax. This ensures the buyer is fairly compensated for their promotional action, and all results are rewarded.
ILO sales themselves, which also count as revenue, are the only thing excluded from the royalty calculation.
Why the company pays royalties
ILOs offer a great promotional opportunity for companies, as their products or services will get promoted by buyers. On ILOCX this is called Qualifying your license. Buyers are required to either promote the companies product or service through social media, or provide a service of equal value to the company.
As an ILO holder, you get paid royalties by the company on an annual basis, for the duration of their listing. The royalties are paid to a pool that gets shared equally between all licenses. You can see the total size of this pool on ILOCX by looking for “total licenses issued” under the financials tab, or on the license agreement.
Buying and Trading ILOs
Royalties are not the only way to make money. An ILO is an asset, and can increase and decrease in value. If the companies doing well, your license will increase in value, and you have the option to sell it.
Licenses generally trade from 5 but up to 10 times the previous royalty payment. Meaning if you last royalty payment was $1.00, your license could be worth up to $10.00.
ILO buyers can cash out at any time after the company has paid their first royalty payment, by placing a license for sale on the ILOCX trading platform.
If you choose to hold your license, after three years at the termination of the license, the company can choose to buy the licenses back, or renew the license for another term.
Start Making Money Today
At the end of the day, the objective of buying and trading ILOs is to support small companies, and make money while they make money.
With ILOs you can make money as an ILO holder two fold – by receiving royalty payments, and by trading licenses.
Supporting a company you believe in and you want to help succeed is a great modern way to make money.
To get started with the buying and trading journey, buy your first ILO now.