Three ways the ICO market has changed and how projects are responding
It’s no secret that the cryptocurrency market markedly changed as the calendar flipped from 2017 to 2018.
The total market capital plummeted more than 70 percent since January. Investor frustration heightened. Investor patience diminished. Many new projects are struggling to raise money.
How have these changes affected investors? How are ICOs responding?
Three items we notice:
1. A talented, experienced team is paramount
As an investor, when you invest in an ICO you are sending your hard-earned ETH or BTC to complete strangers. You have to completely trust that they have the skills and desire to execute on their mission — otherwise you will be left holding a worthless bag.
ICOs with inexperienced teams or pseudonymous devs may have successfully raised money in 2017. They haven’t in 2018.
It is also crucial that the developers have the technical skill to deliver the actual product. Prudent investors are now digging deep into team LinkedIn accounts, Github repositories and Twitter feeds to find all the dirty details.
They are looking for teams with a track record of success, executives that have built businesses and developers that have built real things that people use. Projects that don’t meet this due diligence, often turn out like this:
Terra Virtua’s VR entertainment platform has full-time development and executive teams with elite industry experience: CEO Gary Bracey and his 35 years in the games industry & BAFTA nominations, CSO Peter Bergstrom’s early involvement at the Bitcoin Foundation, CTO Kish Hirani at Sony Playstation, founder Jawad Ashraf’s 30-year track record of bringing tech products to market and many more that you can read about in our whitepaper.
Not only does having an experienced & talented team allow you to deliver on your promises. It also opens up doors to meaningful partnerships that push the project forward.
2. A working product or one that is provably close
Another 2017 trend to add to the list of things that don’t work in 2018: “just a whitepaper” raising $30 million or more. It didn’t matter the extravagance — or truthfulness — of the claims in said whitepaper, projects were able to find communities and money.
That’s simply not the case anymore.
Now that projects are competing over fewer dollars, the market is squeezing out the half-developed & unlikely-to-execute projects and rewarding only the best.
The easiest way to show that you are one of the best? Prove it with your product.
Terra Virtua has an alpha version of our platform that we are eager to show off! The team often bring it along with us when we attend conferences and investor events.
(Above: Terra Virtua Founder Jawad Ashraf showing it off this week in New York!)
3. The market is far more shrewd to the standby tactics of 2017
One pillar of successful ICOs is to build a strong community and create a buzz. This is done through a variety of tactics. In fact, entire industries have since formed around helping projects create hype: crypto influencers, airdrops, bounties, ICO listing sites and many more.
But do these really work anymore?
Investors understand, more and more, that most influencers are compensated for positive reviews. So while they get new eyeballs on your project, are they perceived as authentic? Hard to say for sure.
The same could be said for airdrops and bounties — where community members devote a little bit of their time and effort to evangelize the project on channels like Reddit, Telegram, and Bitcointalk. It seems that most participants are mostly in it for financial gain and not belief in the product. And the market seems to understand this transaction more clearly in 2018.
So what is the way to build a strong (and engaged!) project and community in today’s climate? Hard to say for sure, but a good place to start is making sure the aforementioned items #1 (team) #2 (product) are well sorted.
