Bitcoin Forum

I have been interested for a long time, even worried, and very worried the following question:
Why the ICO projects are collected for $20-30-50 million, but most important, why are these projects believed?!

My occupation is closely related to the world of investment, venture capital.
Venture funds are covered with “gray hair” when they hear that a project that does not even have a hint of mwp (minimal work product), but only a clumsy presentation (White Paper)and after which appearing  even more questions than answers, and sometimes you just want to "blow it up", requests $10 million.

Have you ever thought what $10 million is?
With such a budget, with a proper use in the CIS market, it is real to grow as soon as possible a "unicorn", at the same time attracting a couple of competitors.
For example, who may not know, in traditional, venture capital investments there are life cycles of projects and stages of their financing:
The pre-seed stage is an investment in the idea, when there is nothing, except the description of the idea, as a rule, they are invested by the business owners, friends, relatives or especially fans of extreme and films about "Facebook" and Steve Jobs. The average amount of investment on the pre-seed stage is up to $50,000.
90% of ICO projects are pre-seed stage, they can be given not more than $50,000. For creating MVP and testing it is more than enough. If they successfully "lose all this money" then give more is not worth.

The seed stage is an investment from $100,000 to $500,000, when there is already a small team, mwp and at least some cash flow, sales. The IIDF at this stage throws in projects up to 25 million rubles, that is, about $400 thousand. At this stage, they expect from the project of explosive growth. Money is actively pumped into marketing. Foreign funds can be more generous and throw in up to $1 million, but at the same time, you must be really cool and promising guys.
About 10% of ICO projects with MVP belong to the sowing stage. That means, the "red price" of $500 000, or at the very least $1 000 000. Believe me it is a good amount of money to understand - there will be a project stand for something in the future or not.

Further, Stage A - here, the same IIDF, is ready to cough up the cash for $5 000 000, it's about $5 million, BUT, by this time, the project itself is something that does not represent 9 out of 10 projects with MVP here in the ICO market. It is already strong, experienced, close-knit and ready to break through the walls of the team, behind them are business angels, funds are being built in the line, the product loudly thunderes at least on the local market (CIS,Europe or the USA). That is, at this stage, as a rule, the project receives money for scaling and entering the international market, $5-10 million. If the project is fantastically promising, the amounts can be $20 and $50 million. At that moment, the most "meat-racking" begins, projects fly in different directions like splinters, some collapse, others stagnate, others, some, grow further. Why? Because the international market is a vigorous mixture of the political and mental characteristics of each individual region, each of which can be crucial for the project.

It means, the exit from scratch, immediately to the US, Europe, Asia is impossible in principle. Even gigants are difficult. There is no need to walk far behind the examples, Apple and Google decently tense in order to maintain not the largest market share in Asia. Even in Russia, Google, with a capitalization of $800 billion, divides the market 50/50 with Yandex, whose capitalization is 80 times less. Actually, it is for this reason that international expansion always lasts for years, takes place in stages, demanding huge financial, human and temporary resources. It's not a full-service agency to contact, you know. Sometimes the ministers and presidents of the countries meet.

Stage B  is often invested in "unicorns". This is not even an investment, but a purchase of a stake in the project, which will be released in the next 1.5-2 years for the IPO. There, the amounts reach $100- $200 million.

And now, try to correlate this with the ICO market. I took for free 3 projects on ICOBench with a rating of 4.5 and higher, that is, top projects:
Where is the Elysian project $ 19 million (soft cap $ 3 million)? The guys pushed into the project all the most bizarre technologies, AI, VR, blockchain, to create a platform for websites, through which data users will be more protected. In this case, AI and VR are needed in order to make the navigation on the site more aesthetically attractive.And all this is decentralized. Although, if their service is "pulled out of the outlet," for example, to sip tea into the server or simply not to pay the domain, then most likely, all of the decentralization will disappear along with the project. Again, the amount of the fee – we have enough for all-about-all $ 3 million, but let's get better $ 19, you never know.

Where is EtherInc $22 million (soft cap $ 1 million)? Some ridiculous fork of Ether, the purpose of which is to create an alternative protocol for launching decentralized organizations and creating decentralized applications. Well, how about, create, all the necessary tools are there, Ethereum is available for any perverted forms of picking with a "fork", $22 million for you? Buy a plant to produce smoothies? What is the gap between softcap and hard cap? Let's say the annual budget of the company is $1 million. If we attract a soft cap, we will live a year, if the hard cap, then 22 years. How do they plan the amount? What logic? It is wildly interesting for me.

Where to Iagon $50 million (soft cap $5 million)? Here you have a blockchain and AI and Machine Learning and Big Data and cryptography and all this again decentralized. I did not even read what they do and why. The difference between Soft Cap and Hard Cap is the difference between the 2 stages of the project life cycle. Between the local boom and international expansion. At the same time, no one indicates what will happen if Iagon collect $5 million, what then? And if $ 10 million, then what? Will I let 2 Iagon'a? And if $10-15-20-25 or 30-40 million, what will happen in this case? Every "piece" of investment, something has to do. If we attracted $5 million, we do MVP testing for the local market, if $10 million, create additional functional, we pump into marketing, we seize the local market. If $50 million, we cover the US, Europe, Asia.
And if the local market failure? If you have enough $5 million or, to hell with it, $10-15 million, to understand that "everything" is time to go home. Where to put the rest 35-45 million of green money? Put in the pockets obviously.

I chose projects randomly from the TOP ICObench, not for anti-advertising purposes or vice versa. Maybe they will create what they say, maybe not. They just do not need $19-22-50 million for this. First, $1 million will suffice. This money is enough to test what will be created at the initial stage. For those who believe that I'm wrong -> Ethereum and Bitcoin were created on enthusiasm, without tens of millions of dollars of investment.

I'm told that the more the project says Hard Cap, the more interesting it is for investors. I will upset you, but no. This is full nonsense and delusion. Investors do not go into projects with a big hard, they loudly laugh at those who invest there. They are going into promising projects. Simple, understandable and promising, proven their potential. Such projects are found on the ICO market, but they can be counted on the fingers.
The cheese factory on the block, AI and alien technologies discourage investors, because this is several years of development, which most likely will not be brought to an end. In addition, apart from the fact that all this must be sold to the end user and earn at least x2.

No MVP = scam ICO. If a team of the coolest experts from Google, Amazon, Microsoft and IBM could not develop at least a leaky version of what they say in White Paper, then the money will not help them, and in general they are hardly good specialists. In general, it's fun to study projects, there every member of the team is almost Zuckerberg or Durov. Blockchain and decentralization are not the same. Far from the same thing. If the project is disconnected, shut down or put a curse on it, as a consequence, the entire constructed system around the project will be covered with a copper basin, even if they were directly used by the real blockchain rather than "QuickBooks", this is not decentralization.

Artificial intelligence and machine learning, not only require serious theoretical and practical knowledge in connectemics, programming and mathematics, so also the computing power is consumed so much that even your own data center is open, especially on the scale that the ICO projects are drawing. That is, it's not just an if-then-else algorithm you know.
Virtual or additional reality, well, they are clearly not to be aesthetically convenient to use the site. To do this, there is UX/UI probably too big to use for this VR and AR.

Summarizing up all the above, I continue to ask myself:
- Why do ICO projects need so much money?
Actually even like this:
- Why do you continue to throw money into such projects?

There are opinions?

I will tell you as I think all of the ICO collects funds for some specific purpose and this goal is a project that needs to be implemented from 0 and develop it in the future. Of course, these projects raise funds with a reserve so that they can grow freely

Because they are scam peridot, if one project takes the advantage of hype and tries to raise as much as it can it is a scam project. That money is not for project as well, those tokens also means millions of dollars for creators without building anything.

For example: The project collected $ 20 million. It was launched, having spent $5 million. Failed. What's next? Where will the rest go $15 million?

It is true that most projects today do not require so much money.
These tokens require a lot of money to appear on exchanges, so that's why hard hats are getting bigger.

Because if they earn much money, they develop more easily. Everyone wants to buy invest more. In addition, scam projects always want to collect high money.

of course they need a lot of money to run the project, because they work with teams that need funds to develop the project, in order to run in accordance with the concept. at least they can reach up to softcap for minimal funds

Try to calculate, so much money to start the project is not necessary

I read your post! great post mate! I completely agree with you! something really shady is going on with ICOs... people are just giving away their money for free. this is a really huge problem for us! too many scams, too much money thrown away. Regulation is needed! sorry to say that but investors must be protected!

I completely agree

The budget of any project can be calculated independently approximately, depending on the goals and objectives of the project.
If the project builds from scratch and is completely dependent on investment that roughly looks like this: all projects related blockchain technologies require experienced programmers, if 5-10 people programmers will receive a salary of $ 1,000 then the average time of development of the project idea 2-3 years it will take to pay the salary of programmers 10*1000*12*3=360 000 dollars. We also take into account the advertising of the project and the salary of managers, as well as the remuneration of well-known analysts and advisors for using their names in the project.This will still require about 700,000 dollars.
The cost of renting 100 square meters of space in Moscow will be approximately 3 years 5000*12*3= $ 180,000, and that's the minimum.
The cost of equipment (computers, servers), telephone line, Internet, electricity, taxes and other household expenses are on average 100% of labor costs. From here we get the minimum cost (360 + 700 + 180)*2=2480000 dollars. This does not include conferences, presentations, travel to conferences, transportation costs, contributions for listing tokens on the exchange and others.
In the end we get the picture that the minimal costs of training and the creation of the product of the project is around 3-5 million dollars. That's minimum! And if the road map of the project indicates the expansion of cooperation to other regions,countries, continents, franchise or long-term partnership and maintenance of the program, you can safely increase the minimum amount by 3-5 times.

Most of the projects need to raise money twice less than they claim. Many projects cost even better with $ 5 million than those that collect $ 20 million.

the money needed to be distributed to all bounty participants alone is not small.let alone during mining.
Those ICO project needs money to pay the bills of everyone that has worked for them in campaign and any other.

And aside from that they need bigger amount to sustain and implement their project. The main purpose of having an ICO is to invite investors to invest their project because of certain reaons such as good potentials and has a good team backing up, but sadly we cannot avoid the fact that there are some who are taking advantage to this kind of business such as some fraud projects or as we said scam projects.

Because besides of believing that i will gain money,i also believes in technology behind every projects and this is the reason why we are trusting where we investing.
And why ico needs lots of money?because theres lot of investors and they need to compensate from their investments so they need biggermoney

This is not effective. The team provides a good life, the project goes into the background. It is more effective to invest in stages, is not it?!

any more opinions?

Most projects that requires fund raising are projects that goes out to be a big investments like the way cooperation organize their activities. Hence a huge amount of money is needed for various services like legal, marketing, team, and others which demands a huge amount of capital outlay.

I believe that nowadays there are not enough projects at all for the development of the product. Most of the projects are empty, aimed at further speculation in the market. They collect as much money as people are willing to pay, because everyone understands that if HARDCAP does not collect the price of the stock exchanges it will fall dramatically!

Exactly.)

This post should be merited, especially for the newbies who wanted to know why most of the ICO projects need a big amount of money, it is quite useful for them.

Any project to spend a lot of money to create a beautiful product, marketing and advisors.

Without this, it is difficult to collect the required amount to create a working product

Thanks


The minimum work product is created by two developers within two months, after which it is tested. If the test is successful, invest further. If the project failed on the tests, in the garbage it. To find this out, $150 000 is enough. This is normal practice.

Because they are defraud peridot, whether individual plan give in the expenditure of ballyhoo and dabs to better as lot as it can it is a defraud project.

because I see most of these projects start from scratch and of course they need enough capital to be able to run their roadmap perfectly, but unfortunately many altcoin are scam

Projects need money for marketing, listing on exchanges, staff salaries, rent of premises, business trips.

There are just lots of investors in crypto that it adds up to more than $5M, when it reaches that amount I think the team can guarantee the profit but will only needs time. Some of the money they got are used to buy back the tokens they also released during the ICO to satisfy the investors but this is for the legit team. The problem is some of these ICO team knew how to make people believe the project while they are actually scam.

Just tell me now why they grow like mushrooms after the rain? And isn't he doing anything about it?
How will it go next this forum will be if it is no longer a friendly nest for fraudsters?
We live in a global world why not an administrator can take adequate measures to identify these fraudsters.

And believe me, there are tools for that. And no other "trick" can help. And I don't mean outdated tools like vpn , proxy, tor . no no

Because they are a freaking scam. This is why you need to read that white paper and the underlying asset/project of the cryptocurrency. A lot of projects do not really need so much money (as much as they are asking for). Big chunk of that amount goes to their pocket.

The budget of whatever programme be adapted severally any, reckoning on the object and objectives of the project.

Most likely, because the developers of the ICO project do not exactly know what costs they may face and raise funds for the development of the project with a small margin for several years ahead.

First of all ,if they want to succeed ,they need big fund to support their project, they need to prove that their project has a good and high quality, and if the investor notify what they are doing ,the may attract to their project and this is the start for being successful project.

In most cases, these projects do not need so many means, because so many people do not understand how much money they really need, I believe that this issue requires a global consideration.

I'll agree that there are a lot of scammers who are just trying to collect a round amount and disappear . This is a huge problem . I hope that its to decide . it is possible to introduce a restriction and criminal liability, then they will become smaller )