Why So Many ICOs Fail?
According to Coindesk, over half ICOs fail within 4 months. A mere 44.2% of ICOs manages to stay active into the 5th month and beyond. And ‘active’ here means that they at least post something and stay in touch with the community. Many of this 44.2 % have fallen short of delivering the promised value to their token-holders.
Let’s skip outright scams and frauds and take a closer look at solid projects with a cool concept and a reliable team. Why so many of them fail? We at Priority Token have been observing the industry trends for quite a while, and we’ve come up with a few conclusions. So why do ICOs fail, and how not to go down the same road?
Irrelevant Product Or Service
Before launching an ICO, the founders have to do a market research to ensure that their concept is viable and unique. The problem is that these days it’s very hard to emerge a business idea or a product that is literally exceptional and one-of-a-kind. Chances are your ‘unique’ idea has already been invented and implemented before you. And if it hasn’t, then it may be not as cool as you consider it to be.
Before entering the market, do a thorough research of your competitors and existing products that are similar to yours, or that solve the same problem/deliver the same benefit. Make sure that your concept will be in demand.
No Clear Understanding Of Why They Need Blockchain
We hear a lot of ideas like ‘Uber on blockchain’ or ‘Airbnb on blockchain’. But the thing is that you can’t simply add blockchain on top of anything and get profit from it. We often ask founders, why do they need tokens and blockchain in their project, and we hear nothing but vague generalities. It all comes down to using tokens as a means of fundraising, but that’s lame, let’s admit it!
The cryptoeconomics of the project has to be properly mapped out. To keep the tokens valuable, the demand for them should always outpace their inflation in the long run. Unfortunately, many of the founders don’t have an understanding of why their tokens will be valuable in years to come. This results in a growing inflation level: the more specific tokens are offered for sale on cryptomarketplaces, the less becomes their price.
To avoid that, take your time to develop a flawless tokenomics. Your tokens should be absolutely integral to the whole project and increase the value of your product or service.
Your team members can be awesome guys, but when it comes to surviving on a tight ICO market, their skills and efforts can be insufficient.
Are these people good enough for their jobs? Do they know their tasks and KPIs? If they are a remote team, can they exchange information fast enough, and do they all speak the same language — both literally and metaphorically? Do they have enough experience both in blockchain-related projects and in ordinary business? Are your advisors only smiling faces on the main page, or do they really contribute to the project development?
Sometimes you have to re-evaluate your team members and even replace some of them before it’s too late.
Placing The Bar Too High
The unrealistic goals and objectives always put an ICO in difficulties. The higher you place the bar, the more funds you will need to achieve your objectives by spending money on delivering the product, promotion, marketing, PR, design, and rewarding the team. Your goals and objectives should match the scope of your project.
Your concept, team and tokenomics can be flawless, but the real challenge is to make people notice you and your project. With an ICO, you have a limited time frame to make your offer known by the community. So do your best to make use of all the available means of communication to engage with your audience. It may sound controversial, but you can’t afford a cheap DIY marketing strategy. The times of I-can-handle-it myself promotion are long gone, and to stand out from the crowd you have to take full advantage of the top-notch marketing tools.
There are more reasons of ICO failures, but these 5 are the most common and fatal for a freshly launched project. To make your way on the flooded market, apply for professional assistance and don’t expect to raise millions of dollars to be an easy job.
Want to discuss your project? Let’s do it right away! Contact us by clicking ‘Contact Us’ button on http://ptoken.io/.
And please share your thoughts in the comment section!
When it comes to community management, many ICO founders don’t go further than creating accounts on Telegram, Bitcointalk, Twitter, and Facebook to post news every now and then.