Written by Hugo Jacques
81% of ICOs are scams, according to March 948 States Group study, the first ICO Advisory Group. Only 1.6 percent of them have a future.
“We found that approximately 81% of ICO’s were scams, ~6% failed, ~5% had gone dead, and ~8% went on to trade on the exchange,” researchers Sherwin Dowlat and Michael Hodapp said in a blog post.
Those who think that because you put blockchain on the website or in your startup project and think this will raise money easily, are wrong. The thrill of the hype is over and this is not even related to the recent news on ETF.
We have to change the perspective by delivering something valuable for a specific and selected audience to create a true engagement in order to drive profitable consumers/users/developers’ actions.
Running after investors at all stake is not the right strategy today. Instead, concentrate on the product/service market fit including the investors’ criteria is crucial.
Here are the 5 points — Investor Rules that all founders should integrate into their scope:
- Get out! Via conference, meet-up, networking, social interaction and meet your audience and investors. You will get a better idea and perception of how you should change your product, image and media activity. Face-to-face.
- Community Management: a relationship with the broader blockchain community is still indispensable. Pay attention to your social media accounts, take questions at panels and set up your company booth during conferences.
- Create an ecosystem of partners and stakeholders around your software.
Token creation and operation with your DAO:
- Clear and strong Tokenomics to avoid token trading failure. (I will prepare a future article about this sensitive point)
- A clear linkage between the cryptocurrency and how value is created around the platform operation. You can have a utility or a security token, (or a mix) that will serve the purpose of internal goals and processes of your platform.
- Be clear about what rights the token holders have.
- Does Token value base on transaction volumes, user actions, or other native activity?
- Do you have an actual, binding legal contract between the parties, with sufficient investors’ protections?
- Why the token’s price will increase in the future.
- Build a model for token distribution amongst investors, the project team, advisors, and bounty hunters (aligned with your roadmap)
- Develop a bonus and discount system, and determine whether you need to conduct a private pre-sale and a pre-ICO.
Strong Business Case
No matter what you are building, application, an open source protocol, a platform, or a business, you need to design a solution to a real problem on a significant scale.
Ask yourself these questions:
- Who will be using the service?
- Why your offer is different or better than what currently exists? How will you acquire these customers? Any idea of your Customer Acquisition Cost? (Investors like that)
- Do your Tokens have a compelling value proposition? You have to give a strong argument that your token needs to exist (how, on which platform, scalability, etc.,)
- Did you put strong effort on your white paper? (Content, form and design) Be clear and readable! Simplicity is the ultimate sophistication.
- Are you explaining clearly your deployment and development plan?
Get a clear understanding of how much your ICO costs:
- ICOs are expensive. Your ICO should happen only after you’ve already built part of your platform and have a clear vision of the rest of the platform to show investors and token purchasers.
- Getting to ICO to launch point takes time and money (roughly between $100,000 to $500,000).
Keep your project under control
A team well organized with ambition and supported by advisors. Experience cannot be replaced. Many good experts are in the arena and ready to help you.
- Strong Team with a good selection of your advisors. A valuable advisor focuses on your success, not your money, and stays open-minded and creative.
- Business development, marketing, management and leadership skills are essential.
- Crowd-sale should be controlled by an independent entity.
- Clarify the legal aspects: Legal entity behind the project, form of incorporation, official directors, and in which jurisdiction.
If you are capable to cover these points and questions, you have a really good chance to attract investors’ attention. This is not the end of blockchain revolution, this is just a new and wise era of application and regulation. Chances to succeed are better with a good business model foundation.
If you want to know more, click on the links below:
Hugo Jacques: ICO Advisor | CEO @ bcimpact.com (blockchain consulting and ICO support) | Crypto Project Accelerator | Hugo is currently supporting Blockchain Startups as ICO Advisor and a Smart City Startup as Advisory Board Member for IPO, Marketing and Business Development.