The Fails and Successes in ICO
ICO — Initial Coin Offering is undoubtedly one of the hottest talks in the tech world. The start-ups all over the world instead of begging the VCs decided to raise the money by crowdfunding. In the last couple of years, these start-ups have made quite the breakthrough from the ICOs. Some even raised over $1 Billion through crowdfunding. But there are stories of darkness too — about 46% ICO failed in 2017 alone. However, that didn’t stop the start-ups to go for the ICOs. In the first quarter of 2018, start-ups earned over $6.6 Billion.
So, are you confused? Don’t worry mate! We are here to help. Today, we will share both the failure and success stories of ICOs.
The Fails in ICO
First, let’s start with some statistics. In 2017, TokenData, a front-liner ICO tracker has recorded 902 crowd sales. Among these start-ups, 142 have failed during the collection phase. Additional 276 more start-ups have bit the dust after the post-collection phase. So, we could say that total 418 of the 902 start-ups failed to bloom, which is about 46.34% of the total number.
Wait, additional 113 start-ups just stopped updating their current situation on the social media. So, should we consider them to be failures too? If we add them to the failure list, the failure percentage hikes up to 59%.
The big question is — Why? Why do all these ICOs fail? What have they done wrong? Let’s dig a dig a bit deeper.
Why Do ICOs Fail?
1. Not Solving Real Problems
People are not plain stupid. Especially, if you are asking them to fund your cause, they will probably look deep into your business idea. Most of the ICOs that fail to collect a single penny. They are just simply not worth it.
People will only invest in your cause if you have a solid use case. If your plan doesn’t solve any real-life problem, why should people spend money on your plan? Before launching an ICO, you should consider redefining your business idea.
You could take the example of the Silber Pfeil. The Mercedes and AMG partnered energy drink company failed to gain the trust of the common people as the token didn’t have proper use cases. The basic idea of ICO that the investor will be given tokens in return for the investment. If the token doesn’t have proper usages, why should they spend for the tokens? As simple as that. This is the major and the primary reason for ICOs failing in the collection phase.
2. Bad Tech
The second reason behind the ICOs to fail is that they have bad technological support. We must usher is the name of The Dao as we are speaking of the technological failure. The Dao managed to raise $150,000,000 and they are on the scene from May 2016. Still, they are on the failure list. But why?
The Dao had some serious security issues. The Dao project faced an attack in June 2016 and about 3.6 Million Ethereum was stolen. The Dao project seemed really promising at the beginning as they had some solid plans to establish decentralization and transparency. Yes, they tried their best to ensure decentralization and transparency. But they lacked security. Thus it had to crumble.
Although, The Dao had paved the way for the later on projects and all the new start-ups take a lesson from their failure. No ICO can go a long way if they have a bad tech.
3. Not Being “Global”
Some of the failed ICOs are not just global. In spite of being a global solution for the greater good of the humanity, some just choose to be regional. We will talk about the Tingo Coin in this section. The Tingo Coin entered the scene as the “African Agricultural Blockchain Network”. Alas, the regional tagging made them a bit biased.
The ICO gained quite the popularity in the African region. But not all the investors are from Africa. So, it lost its appeal in the global market. The investment was far too low as predicted.
It goes without saying that you should have a strong reason for people all over the world to join your cause. Otherwise, you will have to share the same fate as the Tingo Coin.
The Success Stories of ICO
Okay, we think we have made quite sad already. Now it’s time we share the good news with you. Undoubtedly, going for ICO is the smart and most practical move for many start-up companies. Earlier, start-ups had to face serious investment problems. The better ideas lost against the big corporate names every now and then.
Back in 2010, you had to beg to VCs after VCs for investment. Moreover, these VCs were like vultures. They stood in back waiting for your idea to die. As soon as the projects failed, they took the idea and earned a fortune. But not anymore!
Today, we have ICO — almost a blessing to the start-ups all over the world.
There are quiet many successful ICOs. Here are some examples, which might not be currently on top in terms of market value, but which executed their ICO spectacularly well.
NEO is often called the “Prince” or the “Chinese Ethereum”. Many experts say NEO is everything that Ethereum is but smarter, faster, and more powerful. With the support of the big names like Microsoft, Alibaba, and the Chinese Government, NEO is as powerful is it gets.
NEO started their journey pricing at $0.03. At some point of the time, when the cryptocurrency market was performing well, they have grossed about 294,000%.! They are in direct competition with the hero of the west — Ethereum.
Interestingly, Tether — a token running on NEO platform is currently the number one token in terms of market cap, reaching more than 2,4 Billion dollars.
Everyone knows that Bitcoin is full of flaws. While people were thinking that Bitcoin is just a dotcom bubble, Ethereum came like a true champion. The 24-years-old genius Vitalik Buterin kind owned the whole market with his brilliance. At the young age of 21 years, his Ethereum introduced smart contracts, DAO and EVM. Not only that but also people can now create newer coins the open-source platform of Ethereum.
Today, Ethereum is in the second position in the crypto world just after Bitcoin. Ethereum has a high dollar value. The some point, price hiked over 230,000% since the beginning. A lot of people including market experts say that Ethereum is the true and most stable cryptocurrency out there — even a lot better than Bitcoin itself.
Spectrecoin is making the tax official all over the world sweating like hell because of their technology. They focus to be the best privacy-focused cryptocurrency. The users can transact money all over the world with complete anonymity. Since their start of the journey in 2016, they have soared over 64,000%.
There is more than these three, like Stratis who had an ROI of 56,000% and Ark having 35,400% ROI or EOS. If you have a really good tech and proper use cases, people will sooner or later award you back. It’s all about making a good reputation and helping the world to be a better place.
There are stories of both failure and success of ICO. But without any doubt, the world around is changing. The start-ups have found a better way to fund themselves. More and more innovative ideas will come along the road.
If you are planning to invest in the ICOs, you should always read the whitepaper, check project team and market experts’ opinions. Then, thoroughly ask yourself: are they good enough? With the uprising of the ICOs, more frauds are entering the market and polluting the ecology. Always keep your eyes sharp and embrace the future as it is going to a lot different.
For now, the ICO market maintains momentum. Will it be a long-term trend? Will raising funds through ICO still be more attractive than money from VCs? What do you think?