Over the last year, the latest method of crowdfunding venture ventures known as Initial Coin Offering (ICO) has grown in popularity. This is due to at least two factors. The first is the growing popularity of cryptocurrencies, which, in addition to transactions, allow for other features such as smart contracts, and the second is that ICOs are a much easier way to raise funds than traditional financial instruments.
Each medal, on the other hand, has two sides (or in this case, the coin). Did you know that more than half of all initial coin offerings (ICOs) fail? According to some estimates, the percentage can even reach 90%. Just a third of ICOs that met their funding targets subsequently reported on their collected data, according to studies. And if there isn't a survey, it's safe to assume that the ICO has failed.
Crypto enthusiasts also have strong ideological beliefs, and will only invest in ICOs that align with their goals and ethical principles. They want to be a part of the revolution of conventional business and economics, and the wisest among them can do their homework, also known as DYOR in the crypto world (Do Your Own Research). As a result, they can quickly spot dubious business ventures. Many factors must align for your potential ICO to be effective. In the following text, we will look at all of the factors that must be considered in order to prevent failure. Or, to put it another way, we'll try to explain all the characteristics of a bad ICO:
There is no distinct vision and no target groups.
Since their product, service, or solution does not have a real consumer demand, Initial Coin Offerings fail as early as the first steps. Things will not go as expected, no matter how exciting your vision is. If you haven't clearly identified your target market, or if there is little to no audience that wants your answer, things will not go as planned. On the other hand, you can consider whether you are the only one in a given industry who promises a game-changing solution. Check to see if any other ICOs are doing the same thing, because if the answer is yes, you're not on the right track.
Goals that drive you to the edge of your abilities
Since all ICOs make big promises, it's important not to set the bar too high. When it comes to the sum you want to collect, be rational. Excessive soft/hard limit estimates, as well as an overly optimistic project scope (the gap between current infrastructure and what you plan to achieve), are red flags. Especially from the standpoint of potential investors.
The greater the pledge, the more resources would be required for marketing, engineering, programming, and other related activities. There was an ICO in the energy sector that sounded fantastic; these people were able to raise enough funds for the soft cap, but not enough to meet the goals outlined in the whitepaper. And, guess what, their token was not listed on any currency exchange, despite the fact that the timeline for doing so had long passed.
Ineffective branding and promotion efforts
The devil, as they say, is in the specifics. You're simply asking people to put their faith in you and give you a piece of their hard-won ether. As a result, these individuals will pay close attention to all aspects of your website, including color selection, graphic design consistency, copy grammatical correctness, and how you interact on social media... If you haven't done any of this properly, the analyst will assume that your project will be conducted in a professional manner as well. Before entering the ICO process, it's best to establish brand identity, recognition, and a fan base. In reality, even before you get to the pre-sale stage, you should have a plan.
Continuous performance assessment, as well as research into the preferences and desires of the target audience, is important. Begin by looking at Google Analytics to see what makes your target persona stay on the site or leave, and then fix any flaws you find.
You may like your coworkers, but are they the best fit for your team?
The knowledge, talents, experience, and character of the people you choose as associates will determine the success of your project. Not only in terms of achieving objectives, but also in terms of investor perception. Potential supporters may look at their history and frequently depend on their instincts. Maybe they won't like the people's faces and LinkedIn profiles on your website's Team board. Show me your mates, and I'll tell you who you are, goes the old adage.
Transparency is still suspect.
We've arrived at the topic of openness. If a visitor to your ICO website finds it difficult or impossible to find details about who you are and how to contact you, he or she will most likely believe it is a scam. The presence of your token on GitHub would also help to increase transparency and trust in it.
This is a whitepaper that would almost certainly be blacklisted.
We've already discussed the need to strike a balance between your startup's potential and its goals (big promises). This needs to be expressed in your white paper as well. A white paper's primary goal should be to be simple to comprehend, rational, practical, and concisely describe every detail. This paper, which should be at the top of your website, is an important tool for persuading people to buy your token. Of course, don't forget about grammar!
Bugs in the app
A software platform or computer coding is used to generate each new token. If you don't do enough testing and don't make sure your platform is absolutely stable, potential supporters would be skeptical. Make sure you know why each step is starting and when it will end (alpha, beta, private sale, pre-sale, main ICO crowdsale, token generation event, etc.)
Another gimmick-driven startup
Finally, don't forget to finish with a cherry on top. I've looked at hundreds of ICO pages, and the general feeling is that they're all the same. Each segment is in the same location, and team members still smile the same way in photos and make similar "bombastic" comparisons... Try to stand out from the crowd when advertising your ICO and attracting your target audience.
