Tech startups realised the value of ICOs as the new yet effective way to fund their projects a couple of years ago. They decided to go down this route rather than incurring huge amounts of debt or getting into a convertible loan agreement. As a result, the ICO space has seen explosive growth over the past 24-months. According to figures published by CoinSchedule, only 43 ICOs were conducted in 2016, raising a total of $95,181,391, while there have been 517 ICOs conducted in the first half of 2018 alone, raising a total of $11,754,224,088 by June 26, 2018.
Investors are Concerned
With such staggering figures, what we don’t realise is that not all ICOs are successful in raising the required finances. Some fail despite having raised a commendable amount due to an absence of a defined future roadmap. Of the 902 crowdsales in 2017, 46% failed either at the funding stage or at a later developmental stage, according to Bitcoin News.
Then there have been reports of multiple ICO scams, where the people behind the project simply vanished with all the money that had been raised via the token sale, leaving investors high and dry with a worthless crypto token.
All this has definitely raised concerns among investors, who now prefer to have all their questions answered before making an informed investment decision. So, if a blockchain project is genuine and wants a successful ICO, they will need to first address investor concerns.
Concerns about Legality and Regulations
If your government is telling you to keep away from cryptocurrency investments, as an investor, your confidence in ICOs will naturally decline. So, the first things that blockchain projects should keep in mind, much before launching their ICO, is to follow the regulatory framework and guidelines existing in the region where they are based.
For example, the US SEC is quite adamant about applying securities laws to digital currencies, as a result bringing quite a few projects under its jurisdiction. Recently, the SEC has issued subpoenas to over 80 cryptocurrency firms to ascertain which ones are unregistered.
It is important that the tokens be listed either as security tokens or just plain utility tokens. Getting into a lengthy legal battle will only harm investor confidence.
Concerns about the ICO or Project Team
If people do not know the team behind the technology and the project, they will find it difficult to build trust or even understand the viability of the solution. It is necessary to give complete information about the team members and the advisory board via whitepapers, websites, YouTube videos and other PR material. When people are able to put a face to the project, they will gain confidence about the project. Another thing to be mentioned here is the experience of each team member. It won’t help if any team member gets associated with any negative publicity. You can also engage with your target audience and directly answer their concerns through influencers on Instagram and YouTube.
The crypto market is still in its nascent stages, and much of what happens is impacted by rumours and speculation.
Concerns about Investor Queries
It is a challenge to keep up with investor queries and keep pace with the active crypto community online, both during and after the ICO. However, it is a moral and, sometimes, even a legal obligation to keep investors updated on the development roadmap. The team has to be easily reachable for investors.
In times of delays and uncertainties, frequent reports and updates will help resolve doubts. Teams can be created to address rumours and negative press in a professional and authoritative way. This will inspire confidence and save a token from sharp price drops.
It is important to note that the stories of exit scams in the market make investors nervous, especially immediately after an ICO. For this reason, ICO owners should always maintain transparency.
Concerns about the Development Roadmap
A flexible, detailed and transparent roadmap has to be put in place, even before the project switches to the actual implementation phase. Key development milestones, with suitable success criteria, should be included.
Keep in mind that investors will concerned with the financial value of the token. It is the responsibility of the team to provide investors liquidity for their investments, by getting the coin listed in crypto exchanges.
It is the responsibility of ICO owners to protect their funds from hackers and scammers too, in the interest of their investors. Phishing attacks apart, ICO funds have been previously harmed by unknown bugs or errors in the underlying wallet codes. Investors should be notified regarding fund security, storage and value investment well in advance.