Initial Coin Offerings (ICO) - Technology Fund Raising for 'Currency' based Tech.
This relatively new 'crowdfund' to generate funds for Technology based businesses, in particular Blockchain powered applications, has become quite 'the thing' in the past few years. Their failure rate post the hype of the Funding of 92% is a terrifying prospect for investors.
The first ICO was in 2013 by Mastercoin, successfully raising funds and beginning the era of Initial Currency (Coin) Offerings. The system creates a Token / coin on which a value is attached. This value is then raised through various 'crowdfunding' activities.
Why are So Many Failing to create a successful Business when there's So Much Money invested?
At a failure rate of 92% this is a very high risk - high reward investment.
But why are so many failing? With so much money how could they possibly fail?
Examples of Funds Raised:
Ethereum :: $2.3 Million 2014
Brave :: $35 Million 2017
Kik's :: $100 Million 2017
This is merely the tip of the proverbial ICO Iceberg where in 2017 ICO's raised 40 times what they'd raised in 2016, with reportedly $6 billion raised via ICOs in 2017. 2018 is set to see even more money being tossed into the Coin well.
That's a ton of cash splashing around...
According to my research, by February 2018 approximately 46% of the 2017 ICOs had failed.
There seems to be no finite answer as to Why so many ICOs are failing. It's obvious the Hype that's created is not supported by successful business models, giving the ICO industry a sticky name for being a very high risk, scam infested arena.
Which is a shame as it's really an innovative way in which ground breaking technologies can raise capital. Giving the average person opportunity to invest in these technologies, which we'd not had access to before. High Reward technology investment has always only been available to the High End investors, leaving the 'little folk' out of the money making arena.
ICO's changed that.
The ICO's are hyped up by communities which are built by gathering the techie's and crypto believers together in various 'techie' online channels for example: Telegram ; Reddit ; Github and then the more open social channels of Twitter and Facebook.
These community members are generally known as 'Hunters' as they seek out and promote various ICO's for the 'Bounty' (Tokens they receive as reward for their time in spreading the message of the project) or Airdrops which are large sums of Tokens 'dropped' to participating community members who will generally be the first to join the community and begin 'Hyping' the project to encourage others to join the community.
This community building is the mainstay of the pre- ICO funding. Creating hype and interest to increase the number of investors and the amount raised.
The community are given tasks during a Bounty run to activate further market share across social and business networks to enhance the visibility and increase community member numbers.
The ICO's are rated by certain metrics with one of the ratings being the number of Telegram members. Needless to say that this is not necessarily a valid metric to use to measure the potential success of a business and, in my opinion, is rather short sighted.
The community members are usually extremely dedicated, spending much of their time promoting and chatting about their beloved ICO to whomever wants to listen. This, as a marketing tactic is inexpensive and effective in rounding up lots of support for the project.
How effective is this in creating a solid business or reaching the end user?
Why so much failure?
An Idea is not a Business.
A Swish Website doesn't guarantee a successful business
A loaded Advisory Board doesn't create a solid business
A Hyped Telegram community doesn't reach the end user/ consumer
Followers are not Buyers of the product
Bounty and Airdrop Hunters are not your customers
ICO Failure boils down to 2 Things: Business Plan & Marketing Strategy
These two are fundamental factors in gaining funding in any other arena. There are only very few Investors who invest in an idea alone. There are even fewer businesses that will see success with an idea alone, regardless of how weighted the Advisory board is.
I've spent a large part of the past 2 years investigating various technologies and their uses in society. Looking at ways in which we can harness the emerging technologies to uplift the millions without basic living conditions. Sounds crazy, I know. Food First. Absolutely, but we can in fact create the food and then create businesses to support that food growing to ensure a circular, sustainable solution to poverty.
In those 2 years I've seen many of the ICO's come and go. Many with very flimsy ideas raising serious capital, some of whom were scamsters from the start and some were just inadequately prepared for the real world of business.
The one common factor, in my opinion of their failure, is a lack of Marketing Strategy and sufficient planning to reach the end user / consumer at the start of the project.
A cleverly crafted & executed marketing strategy is vital in any business.
Why so then do the ICO's miss this very very important part of the journey?
Why are folk investing in a 'business' with zero marketing strategy?
Many don't even have anyone in Marketing within their team!
"Ground breaking. Life Changing. One of a Kind."
Who cares if nobody will ever know about it?
Marketing Strategy is A Must for Every business. ICO's are not excluded.
For any business to succeed there must be a strong, solid marketing strategy composed of every part of the business model from pre ICO through to reaching the consumer who will be purchasing/using the product.
Marketing advisory seems to be a large hole in the ICO industry where most ICO's haven't even considered it important enough to mention in the whitepaper.
ICO Success, Business Success depends on how many consumers you have purchasing your product. Without Marketing there is no way for your ideal clients to know about your product.
"Bonnie Crofford - Experienced Global Digital Marketing Strategist designing strategic opportunities to grow your brand, develop the story and design a foundation of online Footprints."