Why Timing your ICO Right Is Crucialby Sebastian Schuhl
If you’ve recently glanced at any number of price analyses in the cryptocurrency market, you’re likely to see a lot of red numbers. Sure, a few small-cap altcoins pumping a few portfolios here and there, but nothing really substantial. Another clue that it’s bear season is the lack of mega ICO Launches. What began as “Crowdfunding 2.0” in 2017, has turned into something much different in 2018 and rightfully so. The market isn’t as spend happy as when bitcoin was pushing $20,000; and the truth is, these considerations need to be weighed before you start with your ICO launch and the preparation for it.
It’s All Fun and Games Until It’s Not
Timing is key as it sets the table for your ICO. Even if you might be representing the most experienced team whose product is likely to wash away most competitors, you still need to consider the market situation. This doesn’t mean you need a certified technical analysis to give you the green light, but that might help. It’s much simpler than that, and anyone worth their salt can tap into the mindset of the investing community at any given moment.
Measuring the feeling of the market will save you so much time down the line. Your diehard fans will likely follow you to the mainnet launch, of course, but capturing outliers is what turns an average project into something viral. Much of this can be equated to timing too. In the bull market of digital currencies, utility tokens, and crypto assets everyone is interested in trying out their “new money.” When things are on a downtrend, not so much.
In the opening post of this series, we touched on a few important stats to make this a bit more clear. Specifically, we highlighted the amount invested in ICOs in 2018. At approximately $1.5 trillion invested in January, investor sentiment was still optimistic that the crypto Christmas bubble would never pop. As a side note, keep an eye out for phrases on social media along the lines of “this time it’s different.” If you start seeing signals like this, the market is likely in the green. As a second side note, and a good rule of thumb, all bubbles are the same. They eventually pop.
Thus, as the price of bitcoin began plummeting so too did investments in ICOs. September 2018 eventually reported investment figures of roughly $1.5 million. So, yes, timing is key.
Green Means Go
In January 2018, Telegram launched the largest ICO the market had ever seen. Their goal was initially $1 billion, and then they bumped it up to two. Then, after a bit of due diligence from the team at CoinDesk, it was determined, once all of Telegram’s native tokens (TON) were bought up and a novel cryptoeconomic scheme set in place, the encrypted messenger app would generate $14.5 billion in their sale. Everyone was convinced that CEO Pavel Durov was going to finally bring the “killer app” to crypto and accredited investors handed over $1.7 billion in one of the quickest pre-ICO rounds in history.
Then in May, they postponed everything. With more than enough funds to launch their product, regulators on the prowl, the Telegram team announced they would delay their public sale for another time. More importantly, spectators were relatively considerate of the move. Why?
The trick is in the details. First and foremost, timing. Telegram announced their upcoming ICO at a moment when the market was still resilient and heading upwards. They worked hard to manage their campaign and four months later scooped up a hefty load of resources to bootstrap their product. With the digital gold in hand, of which only $400 million will actually be needed over the course of three years according to their white paper, they left a quickly spoiling market in May.
Timing is Everything!
On a different note, the importance of timing is obviously not exclusive to ICOs. In his 2015 TED Talk, Bill Gross, founder of Idealab, presented the outcome of his research on startup success. Bill and his team had analysed 200 startups - some of them very successful like AirBnB, Youtube, and Uber, and others that were big failures - to take a scientific approach at identifying the one factor that matters most for startup success. He looked at five main factors accounting the most for success or failure of a startup and his outcome was quite surprising: neither the idea, an experienced team, a solid business model, or lots of funding was the most important factor for startup success - it was TIMING!
As a recap; as with the right timing of a startup’s product market fit, timing of your ICO is key to its success. If you’ve done a good job of garnering a variety of social capital prior to your ICO, then postponing the event, like what Telegram did, won’t be such a big deal (and many investors may even stick around). In case of falling hammer regulations or an unforgiving bear market, there’s no rush. Once you’re post-launch, things move quick and many of the forces at play will likely be out of your control. By being aware of the industry’s bullish (up) or bearish (down) sentiments you minimize things beyond your power and maximize those within.
Stay tuned for our next article in this series talking about how to identify and manage your target audience.