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ICO research: Only 26% of ICOs have an MVP at the time of launch


ICO research

In a surprising reveal, only 26% of ICOs during Q1 2019 possessed an MVP or Minimum Viable Product while launching their fundraising programmes. This is startling when considering the fact that the failure rate among ICOs projects is as high as 15%.(source)

So what’s the news here? Data suggests there is a strong correlation between failed ICOs and developing a minimum viable product before the token sale.

Also, consider this.

During Q1 2019, ICOs raised a whopping $790 million according to InWara’s Q1 2019 report. An analysis of the data reveals that ~$590 million was raised by ICO projects without a Minimum Viable Product.

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The blockchain hype

If you’re familiar with an ICO launch then you’ve probably come across the following narrative. “ XYZ company is trying to solve-(insert problem) that is plaguing-(insert industry). And they’ve found a solution-(insert blockchain solution), this solution will bring the benefits of decentralization and other blockchain features to the affected industry.

Don’t get me wrong, some ICO projects really are revolutionary but that’s a small minority. Often founders take advantage of the media hype and FOMO associated with “Blockchain” to attract more money.

While marketing your company using the latest tech isn’t wrong. The problem lies, paradoxically, in the blockchain solutions being offered by the aforementioned players.  


Why do ICOs have a high failure rate?

There are a handful of reasons why ICOs have a high failure rate. It could be because of the lack of a conducive regulatory environment or the lackluster enthusiasm of investors towards ICO projects or it could be a combination of some other external factors.

But external factors aside, there is an internal factor that we can point towards. The blockchain solution being offered. As mentioned earlier, ICO projects often consider blockchain preemptively as the solution, to take advantage of the media-hype and investor-interest around it. And then go about finding a problem and solving it using an outrageous blockchain product/service.

Now coming back to the MVP. Developing an MVP and testing its functionality in the real world is a great way to find out.

“Does this product/service solve this problem efficiently?” or “Is blockchain really necessary here?”.

If the answer is NO! Then you’re better off finding a developing a better product/service that efficiently solves the problems. And if you’re an investor, be best to stay away from such ICO projects.


Teardown of failed ICOs


ICO researchsource

 

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There is a lot to be learned from failures. It helps you grow as a person and helps avoid the same behaviour that leads to failure.

The same rhetoric can be extrapolated to the ICO market as well. When analysing the hundreds of failed ICOs around the globe one thing becomes clear as day. ICOs without an MVP have a significantly higher chance of failure than ICOs with one.

A staggering 95% of all failed ICOs did not possess an MVP while launching their token sale. And only 5% of failed ICOs did possess an MVP.

But does this mean if an ICO project does have an MVP, it won’t fail?

Not at all.

Does this mean ICOs without an MVP will definitely fail? Not at all.

All I’m saying is- the data suggests that ICOs without an MVP have a significantly higher chance of failure when compared to ICOs with an MVP.

 

If you're interested in reading about Security Token Offerings/Digital Securities, check out our highly acclaimed STO report: Security Token Offering Ecosystem.