Last year was quite a run for cryptocurrencies. Led by a crazy run by Bitcoin but also boosted by ICO funding craze. The media kept the eye-popping amounts some of these companies were raising via token sales in the headlines which created a feeding frenzy that hasn’t really slowed down yet.
To many, it certainly must have seemed like a quick, easy way to raise funding. The reality is that it’s difficult and very expensive to run a successful ICO, and with each passing month, it gets even tougher. Fortune recently reported that nearly half of the ICO projects from 2017 are dead.
Here are three reasons why:
- Lack of Planning
This is a big one. Just because you have a great website and a whitepaper doesn’t mean you’re anywhere close to being ready to schedule your ICO. The effort it takes is truly under appreciated. Go have a chat with individuals who have managed even successful token sales and listen as they easily list 20 things they would have done differently if they spent more time planning before launching.
Lack of Resources
As mentioned above, 2017 is long gone. As is the original model of an ICO. An ICO used to be (for a very short time) a means to fund interesting early-stage projects. Now an ICO resembles an IPO, and you need coffers full of coins to fund it. When you find the money to fund it, don’t forget to grab the following as well:
- A world-class PR firm & a social media army
- Top notch blockchain developers (if you can find a good one that’s available, send them my way please)
- A digital marketing expert, a team is even better
- The best legal advice your tokens, dollars or credit cards can buy
- Several high-quality writers and content producers (add a technical writer in there as well)
- Online advertising manager or firm
- Your banker – for the amount you’re about to spend on paid advertising
- 10-20 blockchain experts to serve as advisors (this is an open scam and everyone knows it, but play along, you have to look good)
Have all of that? Very good, you’ve reached the starting line.
Unrealistic Budget Expectations
I honestly don’t know what’s worse, the team that spends every dollar on their product assuming it will sell itself (someone recently told me their ICO marketing plan was to “crank up the viral marketing) …or…. the serial ICO teams out there spending everything in marketing with no product (or even the intent of ever building one.)
To help you with further ICO budgeting, we present to you (free of charge) this lovely ICO pricing guide which we’ve titled “the ICO Budget Guide for Newbies”
As you can see above, an ICO can be expensive. The amount it takes to run a super successful ICO like the ones that generate those headlines is probably enough to fund your average startup for a couple of years.
Before committing yourself to a token sale go back and spend some extra money now on your due diligence. Take a realistic look at your available resources. And by all means speak to someone with real ICO experience to be absolutely certain that a token sale is the best option for you. Most of them will happily give you honest feedback. Just don’t be surprised if they try talking you out of it.
if you’re a small team bootstrapping a product and planning an ICO, your best course of action is to raise a smaller pre-sale round to fund your ICO. This is a smart move for a number of reasons, money aside. It will vet your product, your team, your roadmap and will likely come with a vested advisor who can help you properly plan and execute your ICO plan. And at that stage, you want all the help you can possibly get.
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Featured Image: depositphotos/ eskaylim