Safe play: things to know before you put money in ICO

New technologies are often present options for fast enrichment. The latest top trend from recent years was investing in cryptocurrencies and ICO project. The market of innovative startups shows no decline despite the scam projects number right now had risen to an incredible rate. It becomes harder and harder to survive in this storming sea for project developers The investors worldwide, unlike a year ago, are often scared to put money even in a decent idea of a particular project.

Let’s consider you have chosen the Initial Coin Offering funding model for your idea, had found investors and is ready to present your, undoubtedly, revolutionary project. There are many things that come to attention, so you need to be sure in certain particular points:

The team

The core and heart of the project. Future investors always need to be sure that the project team consists of industry professionals, competent and reliable people who are aware of the actual market situation, events, and significant investors.

Product implementation timing

According to the latest bold statistics, nearly 25% of the top-100 most successful ICO’s teams were unable to specify precisely the timing of the product release — and it’s not the best option for the investor for sure.

Actually, not much efforts are required to prove investors faith in a particular project — an already working service, website, active team in social networks or at least a decent project prototype made to impress, usually work out well, because 84% of the current ICO projects can’t provide even that.

Investments

If your project has already gained individual investments from the classical venture investors, the total chances of ICO success slightly increase. More than 50% of the projects from those that collected $50 million at ICO market had obtained venture capital before using the Initial Coin Offering fundraising model.

The Token economic model

Investors are interested in the risks associated with token functions and security, as well as how far the project’s reaction to these risks is planned. Basically, one should state maximum information about the token in the project White Paper to exclude possible doubts.

Exchange options for your project Token

Frankly speaking, if the token is only available on the internal exchange, it may be not very interesting for the investors. But the appearance on a major cryptocurrency exchange may raise the cost of the token by up to 25%. Therefore, even at the ICO preparation stage, it is crucial for investors to understand where the token will be listed — of course, the perfect solution would be cooperation with the major players of the business such as Bittrex, Cryptopia, Evercoin, Coinexchange or other well-known exchanges.

Moreover, it is also vital that the most usual main mistakes and hardships to go through should also be mentioned, which the developer teams face during the preparation stage for ICO — to avoid these failures in your future developments and not to copy mistakes of other failed projects:

1) Overcomplicated ICO plan

Unfortunately, many ICO-players act like they still are on the venture market– during the organization of the round, they plan a small round set with a significant discount, then another round — now more significant, but also with a high discount. The wrong way. Sometimes an extended period between these rounds also has terrible side effects. The central fact to take into account is that the ICO market has its own rules, and cryptocurrency investors are often scared with high discounts. When calculating the possible token cost, it is recommended to focus attention on the venture round amounts — due to high-risk pre-seed round it implies substantial discounts. When conducting a pre-ICO, for example, a discount should not be more significant than 20–25% of the initial ICO round.

2) Poor project presentation

Of course, not every team is capable of presenting your project as profitable and efficient, to create an active community and to share the idea worldwide. Right here experienced PR — and Community-managers may help — one need to pick people with serious positive background in IT, financial and project governance sector. Besides, it is essential to make an efficiently composed and easy for understanding Whitepaper, its images and schemes, as well as the visual materials and videos for YouTube promotion. If your investor is not able to get the idea straight or gets confused, money is sure to be lost.

3) Lack of communication with the community and possible investors

During the work on the technical part of the project, the organizers need to work on the creation of an active community as well, an international one, which would be full of materials translated into English and other popular world languages. The more — the merrier: it is also essential to work with the database, media sources and social networks regularly and take into account the characteristics of the community of individual regions like Northern America, Europe, Asia. The necessary agreements with potential investors might come in hand so that they will not neglect their obligations at the last moment. Otherwise, you may face financial problems in case of a sudden funding withdrawal of the major investor right at the start of your ICO.

4) Insufficient media-PR

Besides, the investor must have sources from which he learns about the project. It is essential to place articles and project news on the well-known website or specialized forum that is well recognized by ICO-community. The work of PR-managers should be initiated at least several weeks– months even before the ICO start. It will help to efficiently use the money and not to waste it on buying outsource help at the last moment. A perfect and efficient way of the promotion will be the participation of project team or its representatives in a variety of world top meetups and scheduled blockchain conferences, where the industry leaders and major investors are eager to meet and establish business contacts.

5) Team selection and the choice of advisors

A strong team of professionals and advisors, which are known to the public and media, is an excellent part of future success. It is essential that all team members to be real people with the existing social network and LinkedIn profiles, as well as consultants, are best to be chosen from was the CEO’s of successful ICO companies, top managers of crypto companies, prominent investors and financial analytics.

6) Maximum project hard cap

Finally, possible investors will undoubtedly be critical in the evaluation of the number of funds planned to attract during the ICO period. Right here, ambition should not exceed the capabilities and market realities. If a year or two ago, a proposal to collect $50 million within the single ICO seemed to be a fitting idea, today the public is already afraid to invest such amounts of money in a large-scale project.

Back in the day of tough market competitors, it was more and more challenging to stand out from the large crowd of similar projects. The cost of any ICOs had doubled and, in some cases, approached $1 million or even more.

Anyway, ICOs era seems to be over and the blockchain industry is slowly recovering from the numerous hollow promises and fraud schemes, giving way to products and technologies, which create a better and more efficient solution for tomorrow.