ICO’s (Initial Coin Offerings) are the latest fad in the ever-evolving cryptocurrency world where things can change in a matter of a few seconds. They have raised billions of dollars of funds for supporting various projects launched by different startups. However, many projects have failed miserably due to some blunders committed by their execution team.
Some of the common ICO flaws that occur are
- Absence of a clear plan or vision – No investments can be fetched if the project lacks a proper direction. The operational plan must have clarity. A good vision statement enhances the legitimacy of your project. Disclose the benefits of your products or services to your investors transparently. Lay down the organizational structure for your project before getting things running. Talk about the problem that you are aiming to solve, the functionality of your project, and why blockchain is the right solution for your project, and the uniqueness of your project from the competitors.
- Unprofessional whitepapers and substandard prototypes – Whitepaper is like the prospectus of your project. It must be professionally written by a well-versed specialist. It consists of all the technical details and important documents related to your project. Having any bugs or glitches in the code would prove to be disastrous. Several ICO’s have been affected due to hacking attacks and scams tarnishing their reputation. Address all your security issues thoroughly.
- Having a shoddy website – Update your website with the latest developments of your project. Investors will just pass by your ICO project if you have a standard WordPress template that lacks freshness. Translate all your website content in multiple languages to cater to a global audience of investors effectively. Invest in a unique design, professional graphics, and include high-quality videos that reflect the product that you are offering to the end-user.
- Implementing a poor PR and marketing strategy – If the project is not widely promoted and advertised among the prospective investors, you are setting the seeds of failure. Publish insightful blogs, indulge in paid advertisements across various channels, discussion forums, omni channels, and publish press releases through media outlets to get your message out to the whole world. Understand where your target audience is located and use the best channels for communication to keep them informed. Keeping in constant touch with your participants will boost the growth of your ICO. Hire a well-versed marketing team to get an edge over your competition. The entire marketing campaign has to be highly aggressive as the industry is rapidly changing due to advertising restrictions by big technology companies such as Facebook, Google, and Twitter. Measure your progress regularly with well-defined KPI’s (Key Performance Indicators).
- Setting the hard cap very high – The volatility in the industry will ensure that the prices of cryptocurrencies are constantly changing during the duration of your entire ICO project. You cannot change the minimum or maximum cap as it has already been coded in the smart contract. Any attempts to manipulate it at the last minute would mislead the investors leading to wrong decisions. Hence, it is highly important to maintain consistency with the caps coded and stated in the official documentation. The smart contract logic can be resolved by releasing updates in case you want to reduce the cap due to an increase in the price of cryptocurrencies or vice-versa.
- Faulty token economics – A solid token distribution strategy is needed for ensuring a successful fundraising process. In case, the usage and utility of your tokens cannot be explained to investors clearly, your ICO would suffer in the market. Disclose all the features and functions of the tokens beforehand to rake in a huge amount of funds.
- Lacklustre security measures – Not handling the data and funds of investors properly will lead to a lack of faith in your project affecting its reliability. Introduce non-penetrable security steps in your platform to prevent any chances of hacks and scams to occur.
- Not communicating frequently – No user will become an investor immediately. They will read your project thoroughly understanding the impact of your terms and conditions before putting in their money. Hence, share engaging content to your target audience for them to get acquainted with the product or service that you are offering. The trust should increase with the intensity of your marketing campaigns. Encourage users to invest based on a clear call to action.
- Cooperation with the wrong partners – Never partner with unreliable agencies as they will deceive your business and harm your reputation in the industry. They will swindle away your money and refuse to give a refund by not performing their services properly. Not even one customer or investor will bother to hear your explanation or clarification as their money is gone forever and the offer is dead.
- Non-compliance with legal norms – Regulatory bodies have the power to halt your ICO in case it has not fulfilled the legal requirements. Hence, always register your tokens beforehand by submitting all the relevant documents. ICO’s are highly regulated now due to the increasing number of scams. Disclose all the sources of your investments to avoid unnecessary trouble.
- Offering untenable promises – Do not offer huge returns to investors by going overboard. Lack of honesty and transparency will harm the fundraising process as well as the expansion of your platform.
Failure can be avoided through well-coordinated work among the team members and disclosing the benefits and assurances clearly to your target audience. Keep in mind the above most common ICO mistakes before launching your ICO in the market. There is no 100% proven algorithm to ensure success.