How to Flop an Initial Coin Offering (ICO) – Part I

What is an initial Coin Offering (ICO)? An ICO is a fund-raising tool used by start-ups working on new blockchain projects. An ICO is akin to an IPO with some notable differences.

2018 has been a particularly difficult year for ICO events in comparison to 2017 (by way of the percentage of successful events – not by amounts raised). Even though the 6.04 Billion Dollars raised in the first quarter of 2018 alone surpasses the entirety of funds raised via ICOs in 2017 which was 5.6 Billion Dollars, lesser number of ICOs are recording success in comparison to 2017. It has been realized that individual ICO projects have thus far singularly accrued most of the 2018 ICO funds. For example, the Telegram private token sale alone raised in excess of 1.7 Billion Dollars.

The observation therefore is that the lessons learnt from a number of ICO scams in 2017 has helped investors become smarter and funds are being disbursed more efficiently – this clearly plays well for the pro self-regulation school-of-thought which I personally subscribe to as opposed to having governmental bureaucracies with little or no knowledge of how Blockchain works imposing their own regulations that stifle innovation.

Extrapolating current trends, we are likely to see the ICO industry realize four folds the amount that was raised in 2017 by December 2018. However, as opposed to about 90% of ICO projects that realized success with their fund raisers in 2017, the trend shows that less than 65% of ICO token sales are reaching even their soft caps in 2018. Many ICO projects in 2018 have either had to reduce their soft and hard cap targets and sometimes even change their ICO dates to much later ones.


The answer is, investors are getting smarter and proof-of-concept is becoming increasingly more important. I shudder to say that we might be going the way of the traditional venture capital (VC) industry where smart ideas are shoved over for some mediocre but large and already-working enterprise, but I hope not.

How then are ICOs flopping in 2018?

  1. Not Having a Marketing Budget; One sure way to ensure that you raise next to zilch with your initial coin offering events is to have little or no marketing budget at all (especially for main ICO events). Service providers in the ICO field are increasingly coming to the consensus that ICO project teams need to pay for their services as it seems preposterous that teams will want to raise millions without any preparatory funds to show for it. It seems bizarre that projects will want to take on investors’ funds without having skin in the game.


Additionally, the space is getting nosier by the day with the proliferation of ICO projects and it is projects that scream the loudest by way of marketing who will catch the eyes of investors. Just like any business, if you do not get the word out there, hardly will anyone know you exist in the first place.


An observation in the space has also shown that most ICO projects with little or no marketing budget more often than not turn out to be scams who want to take investors funds without committing anything to the process of making their projects come alive.


  1. Channelling Marketing Strategy in the Wrong Direction; It is not just enough to have marketing budget, channelling marketing efforts in the right direction is also very important. Seasoned and experienced cryptocurrency investors will look for ICO projects in known cryptocurrency forums and platforms such as Reddit, Bitcoin Talk etc and make verification of these projects on notable and reliable ICO listing platforms – the particular reason for this is that even though projects pay to get listed on these platforms, investors are aware that not all projects that get submitted to ICO listing platforms get listed due to the fact that known listing platforms are increasingly distinguishing themselves and are more often than not seeking to list quality projects to help enhance their image and integrity.


However the afore-mentioned is not full-proof because despite being one of the leading ICO listing platforms globally, we at ICOWatchlist have had some few instances when purported “scam” projects have slipped through our vetting processes, but we were quick to call these projects (Benebit, Prodeum) out.


Another way to help ensure that your marketing funds are properly channelled is to employ the services of ICO promo agencies. It is imperative that project teams take their time to research which promo agencies have shown gravitas in delivering the goods for ICO projects in the past. These agencies do not come for free and mostly not for cheap, but if you really believe in your project, you will put your money where your mouth is – however, most agencies acknowledge that blockchain projects aiming to run an ICO are in their early stages and as such can device a favourable payment plan that works for all stakeholders.


  1. Believing the ICO Advisor has a Magic Wand; Sometimes team members relegate the ICO process and coordination to their ICO advisors, this is a wrong move. Project team members should take charge of their token sale process because in truth, ICOs are run on the merit of the project and not the other way around – in effect it is the project or product that breathes life into the ICO event.


The role of the ICO Advisor is more or less to act as a map to guide the process and help ensure that basic requirements for a standard ICO event are met. Executive team members and founders are the brains behind the project and are best equipped to direct both the course of their product and ICO.


ICO teams must have defined roles for team members and not leave their staff running all over the place with their projects. This tend to make the project and team look quite unprofessional especially in instances when they get to submit their projects several multiple times to the same platforms – such incidences do raise huge red flags that say either one of these; 1. Project could be a scam, 2. The team members do no know what they are about and 3. Team members will probably not be able to properly apply and account for investors’ funds in the event that they do end up raising money.