Dmitriy Gruzdkov, co-founder of BeUpTo.Capital, spoke in the op-ed about the market factors that should be taken into account by startups willing to run an ICO for their projects.

Initially, ICO startups were called projects. This feature is ideal for them. It is difficult to call a company some group of people formed in a week, which is trying to get easy money with the help of a crowd sale.

These projects were not particularly selective in the methods of building a business, as they stole ideas and needlessly added blockchains to their solutions. The quality of the white papers and roadmaps of such "companies" was far below the required level. All this did not prevent projects to attract money on the wave of cryptocurrency hype.

Now the situation has changed. A new wave of projects and entrepreneurs is entering the market:

A project today is considered a business project that is applicable (a solution to a specific problem has been proved), implemented (the project team has experience), and structured (not golden mountains straight away, but a development strategy and specifics on key steps).

Entrepreneurs are from the top level, people from the technology business, who have the experience of one or two exits, a team participating in a project with significant personal funds.

Institutional investors are ready to invest millions of dollars in ICO projects of this new wave. It is normal for them to invest in entrepreneurs who have already launched several successful companies. They need money not for the realization of an abstract dream, but for the sake of solving specific problems. These entrepreneurs can easily get money from crypto funds, but prefer to work with more adequate investors.

Factors that influence the market and make all its participants think:

 The volatility of Bitcoin and Ether is the main factor that has strongly pressed the market for the last four months. In fact, volatility has always influenced the crowd sale market. There is a direct relationship between the activity of investors and the growth rate of Bitcoin or Ether.

 Regulation. Not a week passes by without for some “terrible” news for this industry. All of them have a depressive state on the market. Even those weak attempts to improve the situation that is being undertaken by Malta, Cyprus, Zug, and others do not change the general background. Moreover, the main trendsetter in the industry is the SEC. American law is extraterritorial, therefore, no matter where the project ICO is carried out, the Americans can reach them. There are currently no jurisdictions with blank spaces. All of them carry risks and pull significant financial investments.

 Bounty campaigns are dead. Even in spring, the number of people in the Telegram channel was directly correlated with the success of the crowd sale. Now, it no longer works.

 Crowd sales as an instrument have also died. At first glance, the picture up until 2018 looks very good. But the situation changes if you cut off the top 30 best ICOs. Then we remove another 20, which collected more than $100 million. All other ICOs have attracted a small amount, which is much less than a year ago. Of course, there are successful crowd sale campaigns. But there are so few of them that we cannot understand how to scale it and repeat this success.

 Airdrops have died as a tool for collecting money. But competent entrepreneurs turned them into a method of attracting first customers. As practice shows, it works really well. For example, one project received about 130,000 users to its service using airdrops. The cost of attracting users was four times lower than when using marketing campaigns.

 Listing. On the exchange, the rate of the coin on average drops to half the value of the ICO. In addition, the listing is expensive. On some exchanges, the cost of placement reaches a million dollars. In general, listing on a normal exchange is very expensive and carries risks.

 Scam. Now, projects have started to actively get scammed. The enhancement of the “organic scam” is the litigation of the founders. The situation is getting worse and worse. Lawsuits between founders, investors against founders and others. All this is interesting for lawyers but very unpleasant for market participants.

Planning to attract investment is, first of all, a question of choosing a method. It is necessary to evaluate each realistic option and get the vision of the capital market practitioners, professional investment consultants, or representatives of the investment environment.