Top-5 mistakes that definitely lead to the failure of ICO

In 2017, ICO investors lost more than 225 million dollars, calculated the analysts of Chainalysis company. It is noteworthy that cases of direct and undisguised scam (when the project team escapes with the funds collected via ICO) are still a rarity. "We more frequently see situations when teams attract investments "for the big idea," but they have no plan on developing their product. And another situation: they know the product and how to develop it, but have no idea what budget they will need. There is no malice here, but investors who believed in the project and lost their investments, don’t feel any better," says Roman Kumar Vias, founder of Qmarketing agency.

So, here is mistake number 1. ICO for the money.

This is a situation when the project doesn’t have an understanding of why the ICO is necessary. "The biggest mistake is to launch the ICO without understanding why it is necessary for the project. If the goal of your ICO is to collect more money, then this is a horrible idea. The product should be the most primary," says Vyacheslav Zolotukhin, an ideologist and founder of Blockchain EvoDesk.ru. 

Before you start deploying tokens, you need to calculate and understand the aims of the raised funds, and whether it is possible to do without ICO, for example, to attract a single investor. It is worthwhile to understand that ICO is not the cheapest approach.

Mistake № 2. Failure to appreciate the security risks of holding an ICO. Jeff Stollman, a representative of RMTM, notes that impossibility to make an assessment of the security risks during ICO can lead to dire consequences. You need to understand that the hype about ICO has attracted a lot of scammers who still create fake sites for real projects and steal customers. For example, potential investors receive fake emails (allegedly from the project) that redirect them to fake websites breaching smart contracts used to collect funds. Also, scammers can crack wallets with investments, etc. Fraudulent activities, when clients and funds are taken away, can not only reduce the amount of fundraising but also do irreparable harm to reputation.

Mistake № 3. Savings on PR and neglect of communication with the audience. Many teams believe that their idea is mega brilliant and the product doesn’t need advertising. However, the developers don’t take into account that hundreds of projects launch ICO now and investors have no time to view each of them in detail. The product should have an original "package," which will catch the investor's attention and make him study the project thoroughly. Also, the project team must be in touch with the market 24/7.

"Key mistakes that projects make during token sales are not paying attention to the community on social media, answering questions aggressively, and not spending enough budget (or time) on content creation and PR efforts" notes Felipe Lema Vorobey, CMO of the company Blackmoon.

Mistake № 4. Lack of a convenient, secure and structured website of the project. Experts note that the site is the endpoint. An investor comes here and decides on investing in the project. Therefore, the site should have original and understandable content and has to provide in the suitable way information about the product, tokens, fundraising process, etc. to all potential investors. If the website is not user-friendly or doesn’t provide sufficient data, then the community will not trust the ICO.

Mistake № 5. Leave everything for the future. First, you need to check the code in advance. "You can work with your company developers or freelancers, but the biggest mistake is the same — not to check the code until the last minute. It may cause errors during the launch of startup, and it will require additional time for correction. Therefore, always check the code as soon as you receive it," advises Darshit Parmar, a representative of M-Connect Media.

Secondly, you need to launch the promotion in advance. Experts advise running promotions 2-3 months before the ICO, as investors need time to learn more about the project and decide on funding.

It is far from an exhaustive list of mistakes that could lead to a failure of the ICO. It may happen even to the project with a good idea. Also, it is worth paying attention to the team and not hesitate to ask for expert advice. It should be understood that the ICO is not a game, but a serious work that requires specific competencies and experience.