ICOs cumulatively raised $6.18 billion in 2017. More than $3 billion of the total was raised in the fourth quarter alone. Many sceptics expected the market to decelerate in 2018, with increased regulatory pressure. On the contrary, increased regulations gave greater confidence to investors, attracting more funds into this space. In the first quarter of 2018, ICOs raised more than $6.3 billion, exceeding the amount raised in the whole of 2017, according to data released by CoinDesk.
Yes, the opportunity has certainly expanded at a phenomenal pace. This doesn’t mean, however, that it’s become easier to raise funds. In fact, investors have become more knowledgeable and discerning when choosing the projects to invest in. That’s why as many as 50% of the projects that launched their ICOs in 2018 couldn’t raise more than $10,000, according to figures published by ICORating.
To make the most of the ICO opportunity, it’s essential to gain trust among investors. To do that, you need to know what questions investors will seek answers to before deciding to buy your tokens.
Question 1: Is There an Experienced Team Backing the ICO?
Investors are deeply interested in the team members. After all, your product isn’t ready, there’s no proof of concept and no famous brand backing your project. The team’s credibility gives assurance to investors that the ICO is legitimate. Moreover, the experience the team members is an indication of the commitment to and probability of project completion.
Your core team should have some members who have successfully executed projects in the past. It should also have a composition of entrepreneurs, blockchain developers and industry experts. And, then you need to showcase your team– their qualifications, expertise and experience. Investors are most likely to look at LinkedIn profiles. So, ensure all core members and everyone on the advisory board has a strong presence on LinkedIn. Sharing content written by these members on various sites also positions them as thought leaders.
Question 2: Does the Website Look Professional?
For investors, the website is the face of your project. A simple, yet unique and intelligent user experience goes a long way in establishing credibility. Your website not only requires strong branding, but also needs to explain your proposition simply and clearly. A website with a highly intuitive navigation works best to quickly guide visitors to all the information they need to make the decision. A high-converting websiteis one that’s designed taking into account your project, the industry you wish to serve as well as the target audience.
Question 3: What is the Problem Being Solved?
Many ICO entrepreneurs, most of whom are tech experts, tend to get carried away explaining the nitty-gritties of the technology being used. Remember that many of your investors may not understand technology and some aren’t even interested. What’s most important for an investor is the “purpose” of the project. What problem does it solve or how does it make things easier for the user? Focus on the opportunity, explaining how your project can grab a large enough market share or can create a market. Apart from the need being fulfilled, investors will also look at the long-term vision.
Question 4: What Kind of Token is It?
Broadly speaking, there are two types of tokens – Security Tokens and Utility Tokens. The term “security” refers to any tradable asset. If you’re planning on issuing tokens that merely represent your project, it’s a security token. You may consider committing to a share in profits or the payment of interest or dividends to investors after your project goes live. The primary goal of investors in such tokens is to hold them until their prices rise and to sell them for a profit.
Utility tokens, on the other hand, provide investors access to the goods or services being offered on your platform. For instance, if a project uses blockchain to provide a decentralised cloud storage service, it may offer tokens that can be used by the holder to purchase storage space once your service is launched.
Question 5: Is the Roadmap Clear? Does It Look Realistic?
It’s important that the roadmap of your project is clear to investors. Also, the roadmap should give confidence to investors that your team will be able to complete thedefined levels within the defined timeframes and within the defined budget. An overly optimistic plan could raise investor concern, as they may feel that you’re making too many big promises.
It’s a great idea to create a graphical representation of the roadmap, so investors have a quick view of it. The graphics can be shared on the website, while the details can be explained in the whitepaper.
Question 6: What Are the Tokenomics?
Investors expect a highly detailed and comprehensive plan for raising the funds. The plan should clearly define how the token can be used within your project and the benefits it offers. Then comes the token distribution, which should outline the total number of tokens that will be minted, the number of tokens to be offered at different stages, the price at every stage and the different ways in which these can be bought or earned. Your whitepaper should explain the tokenomicsin detail.
Question 7: How Passionate is the Team?
A great plan needs to be backed by a team that will continue to be committed to it through the entire roadmap. This commitment is reflected not only by the credentials of the team, but also in how passionate they are about what they’re setting out to achieve. Investors will look at articles and blogs written by team members. They will also check out press releases from the company and look at forum answers. Provided you know how, social media posts, particularly on Twitter, Instagram and Telegram, are a great way to reach out to investors and communicate your passion and commitment to the project.
Question 8: How Active is the Community?
Investors will look for ICOs that are supported by a community of technology and/or investment experts. Build up your presence on various social media groups discussing blockchain, ICOs, the wider crypto market and your industry. Invest time in setting up a supporting community on Slack or by sharing part of your code on Github. An active community indicates the enthusiasm generated by your project and shows your attitude towards openness and transparency.
Question 9: Are There Any Unaddressed Concerns?
The task of reaching out to investors and promoting your project is challenging. Amazingly, bad news spreads like wildfire. Negative comments about your project could ruin your chances of success faster than you’d care to imagine. It’s critical to answer every query about your project and address every negative comment. And, you need to do so with passion and positivity because investors can detect when you’re being defensive.
Question 10: Are There Any Loopholes?
Investors are cautious. The more discerning investors actively look out for loopholes and contradictions. So, random statements and social media posts could be detrimental to your ICO dreams. What you need is a well-defined, results-driven marketing strategyand expert execution. This will help maintain consistency in voice and message and achieve the desired outcome.