Important Considerations When Investing in ICOs

Initial coin offerings (ICOs) have become a popular way for people to invest in burgeoning projects in the blockchain and cryptocurrency space. They can get into these investments at the ground level and hopefully watch the company grow and mature into a successful business over time.

These investors may be excited about a given project and what to do anything they can to help it succeed, whereas others simply want to tun a nice profit.

However, the ICO world is full of a lot of optimism but often disappointing results. The majority of ICOs die after a few months, with only the strong surviving. There are also a lot of scams targeting ICO investors that you also need to watch out for. Therefore, there are some key factors that will make an ICO a lot likelier to succeed.

 

Having a strong community

One of the most important factors for any company to be a success is the community that is involved in the project. When there is a passionate base of supporters who are early adopters, they will shout about your offering from the rooftops.

This will build a loyal customer base who will help you tailor and tweak your offering according to their feedback. The key is to be very clear and regular with your communications.

A lot of ICOs tend to forget about this side of things, often providing updates only every few weeks or months. If you run into obstacles and downturns, this loyal community will stick by your side and you will be a lot likelier to come out with your head above water.

Extreme clarity on the product or service

A lot of ICOs have an idealistic vision of what their product or service may look like at the end of development. This is often not very well defined and leaves a lot to be desired.

Then there are those ICOs which have planned for everything in fine detail and are able to pass on this clarity to potential investors. People will not be confused about what they are trying to achieve as there are detailed targets that they need to hit, rather than obscure goals.

This will give people confidence that the ICO knows what they are about and will not be running around like headless chickens when they get their funding and the time for the real work to begin comes.

Powerful partnerships

One key way that ICOs can accelerate the success of their token sale and projects a whole is to get some established reputable partners on board. Whether this is in the form of a major institutional investor or a partner in the given product or service they are offering.

If established companies or investors put their reputation and money into a project, there is going to be a lot more credibility attached. They are not going to be just throwing their money around, they will have done their research and will be confident in the team and the idea involved in this project.

A strong team

An ICO can have the best idea in the world but if they don’t have the team to execute then they will not be a success. A good team is vital for the growth of any business. There needs to be a leadership group that can steer the ship in the right direction and to negotiate any obstacles they may encounter.

Many people will quit at the first sign of trouble, but strong teams will adapt and overcome any challenges that come their way. It is usually ideal to have a mix of technical ability and knowledge coupled with team members that are savvy on the business and promotion side of things.

A lot of ICOs are too one-sided in this regard and this lack of balance ultimately leads to their downfall.

 

Meet all compliance requirements

 

One of the not very sexy parts of any business is the compliance side of things. The likes of anti-money laundering requirements, know your customer identification, meeting regulations, taxation, terms and conditions etc. All need to be considered.

This is the boring stuff that cannot be ignored. This is why you should always have experts in this regard and always double and triple check this side of things. If there is anything fishy, investors will not be long spotting it and all hopes for raising significant money will be dead.

The ICOs that have these affairs in order and are on the right side of the authorities are the ones that are setting themselves up for long term success.

One of the big issues in this day and age is protecting the data of your customers and those who are signed up for your respective communication lists.

This security of data should always be a priority, as a failure to do so can destroy the reputation of an ICO. Many major ICOs have fallen foul of the authorities by not following securities laws for example.

Good timing

Just like everything, a little bit of luck goes a long way in an ICO being a success. Usually, the best time to hold an ICO is when there is optimism and excitement in the sector. This is because there will be a lot of investor money coming into the space and people will be bullish on the sector.

On the other hand, when there is major news about scams or failing ICOs, this is not going to be a very good time to hold your ICO. Of course, ICOs do not really have control on these variables, but timing can play a significant part in the success of an ICO.

Ultimately, the creme will rise to the top. Many of the leading companies in the world were grown during periods of great recession.