ICO funds have poured in at record levels and in 2017 the overall market capitalization grew to over $US130 billion. It seems you can just add the words “blockchain, cryptocurrency, token” and investor dollars will hunt you down. Every day multiple new ICO launches promote their “ERC-20, industry first and get in before we get listed on the exchange” propaganda.
Across the tech world people want to be “the first” to disrupt and revolutionize” some old-school industry. These dinosaurs have missed the opportunities of information democratization. FOMO (Fear of Missing Out) is rampant and “low-information investors” are screaming “take my money”. It all seems almost too good to be true.
And that is the actual case. Executing a successful ICO is difficult. A lot of things have to fall in place. This is why the majority of these ideas will fail and you will never see an actual working product or service on the market.
According to a recent article in Fortune magazine “Nearly Half of 2017’s Cryptocurrency ‘ICO’ Projects Have Already Died“. And Bitcoin.com found another 113 projects that it calls “semi-failed,” because their teams have gone off the radar or their community has withered away. Add those to the mix and the failure rate jumps to 59%. Nervous yet?
As investors grow wary and scared the flow of funds will begin to shrink.
People are getting smarter, earlier. They’re doing more research, sharing information, getting the facts and exposing the schemes, scams and con artists behind these projects. Regulators are getting more involved in cryptocurrencies and they are starting to prosecute scammers. This will make it more difficult for new ICO projects to achieve PRE-ICO and ICO success.
“The token sale was a blatant rip-off” is what the US Securities and Exchange Commission (SEC) said about PlexCoin, a Canadian digital startup. The company founders, Dominic Lacroix and Sabrina Paradis-Royer, have repeatedly broken securities laws in the past. But thousands of investors traded $US15 million for the tokens which had no purpose other than to be swapped between people hoping for tremendous returns. The old saying goes “a fool and his money are lucky to get together in the first place.”
Bitcoin.com went through the wreckage of failed ICOs and painted a dark picture. Imagine “a digital graveyard” of “abandoned Twitter accounts, empty Telegram groups, websites no longer hosted, and communities no longer tended.” Welcome to the field of undelivered ICO promises.
Anyone thinking about supporting a crypto-tech startup with their money, enthusiasm or commitment is going to be more cautious.
But what do you do if you are not the next “Shitcoin of the Week”? Your project has solid technology, a tangible product and a global team of experts working together. How can you increase your chances of ICO success in the tough global marketplace?
Poor visuals and graphics, confusing navigation and error-filled text/copy are definite red flags. Is the website current and up-to-date? Does it provide the information potential investors need? If your online hub screams “Leave this site now!” to investors then you’re going to have a problem achieving your revenue goals.
Is an ICO the best route for your business? What role does blockchain play? What problem does your project solve? How can the application be used to save time or make money? Is there any infrastructure? Show me the real-world marketplace and business examples. Without a valid business case the creation of a new token is meaningless.
When someone creates a new cryptocurrency it has to be implemented through software. The tech solution has to be translated into computer code. Is there an alpha version, beta version, or GitHub repository? Is tokenization necessary? How much testing has been done? Is the platform secure? If the potential miners and coders are hiding so should investors.
This is the backbone of the ICO project. It should be well-structured and easy to understand. A good whitepaper explains the business details and the technology solution. It should include the roadmap that must be followed and the business strategy. Investors should be afraid if this document contains errors, bad logic and is generally confusing. Find someplace else to put your money.
An ICO depends on a robust community for investment and that audience needs to be well defined and engaged with the project from the beginning. There should be hype and buzz about the project before the ICO is available. In fact some projects are so exciting they hit their financial goals PRE-ICO. Smart investors check the forums, Bitcointalk.org, Reddit, Telegram and the industry press.
Who are these people? What are their strengths? Investors want to see actual professional profiles and proven experience related to the project. If you can’t find them on Google, LinkedIn, GitHub and at industry events they probably won’t impress investors. We know it’s crypto but your team should not appear to have been in a government Witness Protection Program.
A beautiful coin with a memorable name, attractive logo and a hook for a tagline is a powerful branding message that will take you a long way with investors. If a team is seeking to raise $US5 million or more, and not willing to spend at least 5% on marketing and PR efforts then stay away. Promotions is one of the hardest and most important jobs for the long-term success of the project. Vaporware is the new snake oil.
Is the marketing approach a “Pump And Dump” scheme or an actual strategic plan with a mix of platforms, channels and paid and organic techniques?
Some investors and traders believe when bitcoin prices rise, the life of fast money, Lambos and crypto millionaire stardom cannot be far behind.