ICORating’s “ICO Market Research Q2 2018” report delivers a very clear message for blockchain loyalty companies looking to ICO
Make sure you have a product ready to go and a market ready to use it.
The vast majority of blockchain loyalty companies who have run an ICO over the past 4 years have done so just with an idea. Many of them have been successful in raising millions (or tens of millions) of dollars, which they’ve then used to build a platform and launch a program.
The ICO environment has changed rapidly in the current bear market climate. According to the ICORating report, companies just with an idea are least likely to successfully complete their ICO.
While $8.3bn was raised via 827 projects in the quarter, half of the projects couldn’t raise more than $100k and just 7% are listed on exchanges.
Most shockingly, 55% of all ICOs failed to complete their crowdfunding. In analysing success factors, ICORating identified ICO’s which were most successful were run by companies with an MVP ready to go. ICO’s which were least successful were run by companies with just an idea or some source code.
There are many blockchain loyalty companies operating around the world after running successful ICO’s, but not a single one of them is operating at scale. It appears clear that investors are no longer going to invest blindly in the idea, but want to see a more advanced project. Based on that, here are Loyalty & Reward Co’s recommendations on how a blockchain loyalty companies should position itself to increase its chances of a successful ICO:
- Team: Have a solid team with strong loyalty credentials. Far too many blockchain loyalty companies have been founded by teams who don’t have a background in loyalty and don’t understand loyalty. It’s complex stuff and requires the right strategic direction from experienced individuals.
- Product: Have a working prototype or MVP program available to demonstrate the member and retailer experience to investors. If the program is already running across a number of retailers, even better.
- Market: Most blockchain loyalty companies have delivered a solution, and are now madly scrambling to find a problem. In many instances the problem doesn’t exist, which is why they are failing. For a blockchain loyalty program to succeed it needs engaged merchants and engaged members, and the company needs to be able to communicate where these will come from. Starting any loyalty program from scratch is incredibly hard. We predict the first company to succeed in the blockchain loyalty space will likely be an established company or conglomerate who can layer their program over the top of an existing customer base. Rakuten in Japan is certainly one to watch, as are Liven in Australia.
It seems the age of easy ICO money is over, but with the total amount of funding being raised by ICO increasing, those with quality blockchain loyalty projects should be very excited.
Philip Shelper is a specialist loyalty consultant based in Sydney, Australia who obsesses about everything to do with loyalty and rewards. His company Loyalty & Reward Co are a leading loyalty consulting firm.
Phil is the author of “Blockchain Loyalty: Disrupting loyalty and reinventing marketing using cryptocurrencies.”
www.blockchainloyalty.io is a global resource centre for everything blockchain loyalty.
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