Why Is It Hard For ICO Startups to Raise Money?
Last week I attended the biggest Russian cryptocurrency and ICO forum in Skolkovo that hosted 1500 participants. During the Crypto Conference we had a chance to talk to experts and listen to numerous market participants in order to make our own conclusions. Yes, the main conclusion is in the header — ICO funding speed has slowed down. Startups need to keep their finger on the pulse to raise investments.
1. Funds’ tactics has changed
Speakers from Funds that used to invest in ICO startups before are now very cautious about new investments. Firstly, they are overwhelmed by a huge inflow of blockchain startups and experts do not manage to assess them all. Only teams that have access to Fund’s representatives have certain chances. Secondly, cryptocurrencies are now growing and the Fund can make more money by simply trading.
2. Private investors extended requirements
Private investors are financially constrained and are now also cautious about new projects. They want a Beta and not an Alpha of a startup, they look for an operating system prototype rather than a demo version.
3. The problem of regulation still exists
Everyone is scared by uncertainty. As this fall several countries banned investments in tokens, other states are expected to do the same. Whether cryptocurrency will be banned in a certain country is the main question posed to authorities. For example, at the Crypto conference, a representative from the Russian government was inundated with questions on the law regulating ICO and cryptocurrencies that is being drafted right now.
Russian State Duma expert Elina Sidorenko spoke vaguely but the main message was as follows — Russia is not planning to ban it but it will try to regulate it:
It took us much time and effort to draft this bill with the Central Bank of Russia. Why hasn’t it been introduced yet? If it had been submitted to the State Duma in October, it would have received negative feedback. We need a good federal project in this sphere, we are waiting for a wave and the wave should be created by the community itself.
4. Marketing requires investments worth hundreds of thousands of dollars
All the ideas of project promotion become outdated if not once a month, then at least once a quarter. One of the venues hosted speakers who have already carried out an ICO and earned several million dollars in cryptocurrency. What did they say about promotion? Just clichés — launch a Telegram channel, update the BCT branch, chat with investors. As Digmus case demonstrated this fall, these are now secondary marketing tools. Now you need a lot of primary tools to invest in native content, project assessment with listings, etc.
5. Сrazy ideas for mining are in demand
Miners have livened up following an increase in cryptocurrency price. During the gold rush one should sell shovels rather than go to gold mines — this is a famous maxim. The craziest ideas meant for miners are now in demand among investors. For instance, I talked to a team member who was developing an airship that will use wind power to generate cheap electricity for a mining farm. An airship!.. And he has already received investments worth hundreds of thousands of dollars…
So, here’s my advice — if you are still hesitating about the sphere of a startup, pay attention to technology for miners.
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