ICO Thoughts (episode 1) Setting a CAP
48hs after D-Day, and having raised more than 8200 ETH (65% over our Low Cap), I wake up again in an hotel room somewhere in the world, about to attend another conference in which everybody will speak ICO language. It is like an endless dream in which you are trapped in a Star-Trek convention where a bunch of grown-ups in disguise only speak Klingon.
I really love the concept behind ICO but, maybe because I´m exhausted, I´ve started to be very critical of many models.
“Our hard cap is 30M. Our soft Cap is 1M”… Wow! If you´re looking to raise 30M what would you be able to do with only one million? Maybe that million is closer to the fundraising expectations of the company and being afraid of losing everything, they set a cap that at least cover their ICO costs.
Soft cap is set on top of fear. Hard cap on top of greed.
So… you want to build up a product. And you can bring up and MVP and a smart communication plan with, let´s say, one million dollars. That should be your soft cap, a number in which you can really are able to come up with something and build value on top of it. You think you can raise more, that the market is sweet and money is all around falling from the trees? But, what would you use that money for? How would this extra money be able to make you build more value on top of your project? Let´s be honest, if you can make it with 1M, then 2M is extraordinary. 3M is starting to dilute the value of the contributors.
ICO contributors are expecting you to raise the value of their participation, and it is way easier to bring value out of a realistic cap.
I´m starting to think that the difference between the soft cap and the hard cap of an ICO project is inversely proportional with the chances of the team on delivering a successful product. A huge difference has to be a red flag for anyone participating on this ecosystem.