Many reasons why an ICO's fail and this a 4 top reasons why ICOs fail
1. Competition Within a Small Target MarketUsers and investors in cryptocurrencies still represent a tiny percentage of the entire investment market. And a business plan divides the target investors even further depending upon the project, meaning that your crowd sale campaign may only appeal to a very small target audience. In the end, such projects fail to meet their target funding. Often this reason is closely related to the next one.
2. Founders Tend to Be Too AmbitiousAccording to OGS Capital, a team of professional ICO consultants, a lot of founders also don’t fully work through their business model, so that it appears attractive to a larger pool of crypto-investors. They fail to prop up the value of the ICO for long. So the hype wears thin, as do investors.
Then there are things that impatient founders do that can hurt its reputation during the ICO process. For example, offering discounts to investors who have the money to buy large blocks of tokens will cause smaller investors to walk away; there is also the potential for some ICO funds to be hacked. These types of things make investors suspicious and reluctant to invest.
3. Failure to Justify The Longer-Term ValueThere has to be enough demand to buy a crypto, for those tokens to increase in value over time. If token inflation is unsustainable, demand obviously crashes, and the crypto becomes worthless. There will simply be not buyers and a lot of seller holding valueless tokens. Projects cannot grow unless the crypto behind them does well too.
4. RegulationsChina recently banned ICO’s, stating that they were a full threat to the nation’s economic stability. While this may only be temporary, if and when that market returns, it is likely to be heavily regulated. In the U.S., the SEC recently named DAO a security, and ICO’s could face the same applicable rules. Other countries may follow. This prospect discourages investors, in an already tiny investment group.
The other issue is in converting crypto into fiat currencies. Any investor with tokens worth more than $50,000 will face scrutiny by any bank in the U.S. and most banks elsewhere. Many, in fact, will not accept large deposits of fiat currency that have come from cryptos.
One of more of these risks has surely resulted in the large failure rate of ICO’s. Startup funds would do well to take each of them into account far before launch.
source :
https://e27.co/top-4-reasons-icos-fail-20180323/
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