VC on Blockchain

Before you ICO, learn from challenges and experiences faced by those who have gone that route

“I am doing an ICO,” is the one of the many buzzwords that goes around the tech startup ecosystem these days. To many startup founders, it sounds like the easiest and quickest way to raise capital.

According to the ICOBench statistics, there has been 1,020 ICOs raising a whopping estimated US$21.6 billion globally from the period of October 2017 to March 2018, with an average of 100 to 250 ICOs per month.

But behind-the-scenes lead not an easy path to raising funds via an ICO. I spoke with three startup founders who went through or currently raising their own ICOs to understand the challenges and advice they have. 

Cover image Gaurang, Will and Gene

L-R: Gaurang Torvekar, Will Lee, Gene Yan Ooi

The reasons for an ICO

1. Fundraising was not the priority for the ICO

“We didn’t start by thinking we absolutely needed to do an ICO,” explains Will Lee, CEO and founder of the Blue Whale Foundation (BWF). Through years of experience on a SaaS platform in the sharing economy, BWF was started with a goal to improve working conditions for freelancers. As blockchain technology developed, he realized the vision could be achieved by leveraging blockchain and having BWX, BWF’s own cryptocurrency.

He continued:

We could have pursued other options for fundraising including more traditional VC and angel investment options, but this would go against one of the main principles of our vision and product — decentralisation. We believe in the power of blockchain to decentralize a number of key industries in the economy. Blue Whale is building a decentralized ecosystem for freelancers, so it is only natural that our fundraising model follows that same path and we can engage our entire community.

BWF raised US$19m (S$25m) since preparing its ICO in early February 2018 and ends its hard cap of US$22.8m (S$30m) public sales in May 2018.

2. ICO did not suit first startup, but a pivot did for the next 

Echoing similar sentiments is Gaurang Torvekar, CEO and Co-founder of Indorse. He and his co-founder were working on Attores, a prior startup for more than two years. They identified that they were too early in the market, citing the lack of adoption and maturity level of blockchain for Attores.

We realized another need in the market: the validations of skills. This led us to start Indorse, which had an intrinsic used case for a utility token. My co-founder, David, had been thinking of tokenisation for a number of years, and the Indorse model was a natural fit. We felt that the cryptocurrency community would be supportive of the project and token model.

Indorse was launched as a decentralised professional network, which aims to build a social network where the user is in charge of their own data, rather than a third party, and incentivises professionals verifying and endorsing the skill sets of peers. And true enough, the community responded well and Indorse took about five months to raise US$9 million in August 2017.

Also read: Top 3 ICO challenges that can make you think twice before investing

3. ICO a faster route than VC funding 

Gene Yan Ooi, co-founder of, had two options for fundraising: traditional venture capital or ICOs. Leveraging on over 5 decades of experience in Compliance and RegTech, his startup is a decentralised Know Your Customer (KYC) network that provides an inclusive KYC solution to cryptocurrency and blockchain product companies by fusing Smart Contract and Artificial Intelligence technologies.

He shares his decision to decision to take an ICO:

In the end, it was more suitable to‘s purpose. Through ICOs, good teams can raise more capital in a shorter time than going through traditional venture capitalists. With less time spent on the fundraising circuit, more time and energy can be devoted to building a great product. has yet to conclude its ICO and is waiting for a good time to launch its public sale. It took Ooi’s team six months from the team formation to the launch of the private sale.

Challenges faced while raising an ICO

The intense and gruelling lengthy hours of hard work were the constant highlight among the three startups.

Indorse team was small at the start of the ICO. Torvekar shares:

In addition to running the development of Indorse the product, running an ICO is a business in itself. With limited staffing it was extremely challenging to both develop the prototype and properly market and prepare technically for the ICO.

Success was due to pretty hard work to overcome challenges. Most days, we were working 12+ hour days, constantly being online, paying attention to the different social media channels, etc in order to get stuff done.

Another challenge was limited information on a documented process. We just had to follow the best practices set by some of the most successful and well-known ICOs/blockchain companies like Digix and Augur.

For Lee, he felt challenges were marketing-related. He says:

A successful public sale is a challenge as we have to targeting the two groups of audience: cryptocurrency contributors/users and general population of potential service users in the sharing and gig economy.

While there are overlaps, our team is tackling with strategic marketing approach. The Blockchain is a new industry and we see untapped marketing potential so our Communication and Marketing team is excited and working progressively to build the strong brand image and marketing ground.

He adds on that marketing has been successful, where private and pre-sales have gone according to plan, and credits the wide variety of experienced talents that includes freelancers from the community.

Advice to startups thinking of an ICO 

Before even embarking on an ICO, one might want to hear the words of wisdom from these experienced ICO founders.

For Lee, he believes that many ICO startups concentrate on building the technology and lose the focus on the problem they were trying to solve in the first place. This leads to a mismatch of the technology which might not be resolving the pain point that was first identified. He recommends that one continually go back to basics and review the business problem.

Torvekar cites an interesting trend:

Although there is a much larger audience for ICOs now, the number of new projects launching has grown exponentially. It is extremely crowded now to get the attention of supporters.

He finds one must have to have a truly unique project, a strong marketing plan and team to stand out among the crowd. To further add, there must be a need to have a well-developed product, along with traction and actual users / customers. He urges upcoming ICOs to get good legal counsel and follow the best practices in particular to regulations and legal considerations.

Ooi highlights the importance of having good advisors to guide you through the process before, during and after the ICO. He also advises startups to think whether their product functions well in a decentralized ecosystem. To him, some things are better left centralised, and the case for an ICO may be weak.

He also believes in conducting the ICO by his own team as much as they could and avoided outsourcing.

He explains:

Some companies may be tempted to turn to ICO advisories or turnkey ICO shops. These guys offer to do everything from writing the whitepaper to the collection of funds. I really don’t recommend doing this for a number of reasons (1) most of these guys have never actually ran their own ICO, (2) there is a misalignment of incentives (the team gets rewarded when the business does well, but the ICO shop gets rewarded once the ICO is complete), and (3) the real cost can turn out to be quite high.

Relevant advisors are also key.

We’re pretty lucky to have some of the best in the industry on our board of advisors. Conversely, having incompetent or mercenary advisors can severely hinder a team and its ICO. There are many people clamouring to be advisors now, most have not actually conducted an ICO, nor are they really experts in blockchain or cryptocurrencies. Find the right advisors!


This article is part of the “VC on Blockchain” series, where I dwell into the impact of blockchain in the VC and startup world.

This article first appeared on e27.