The organization that issues ICO for fundraising will have a solid
built-in customer base before the official product launch.
The issuance of tokens can provide positive networks effects such as more financial security
to develop the product in a specific time frame, security of the operation - money transfer and
settlements are operated in a decentralized network, and the blockchain technology
has already been proven secure and effective - a larger user base to sustain the operation.
It is a fast and relatively easy model of fundraising for open-source projects.
The investors/donors outreach has no geographical limits and therefore is more global and
non-discriminatory, giving everyone a chance to participate. However,
some organizations chose to only accept accredited investors.
The organization doesn't need to spend a lot of money with marketing, considering it can be
exclusively done online. Online marketing is an inexpensive and very effective way of
raising awareness and attracting customers for any organization nowadays, as
long as there is a prior market research, evaluation, and it's followed with
results testing to prove which channel works better, what title is more attractive,
which campaign is more suitable for that public.
Retail investors have been receiving this model of financing well,
and retail token pricing usually reflects on the organization's liquidity.
For investors and donors
The money is easily transferable without any bureaucracy and third parties involved, which motivates the emergence
of online communities for token holders, potential buyers and cryptocurrency enthusiasts to discuss
and share knowledge, or even to track progress of the organization.
The investment is more democratic, considering that many people can contribute financially with a
lower or higher amount of money if they believe in the organization or are interested in
the product that is being developed.
There is some risk, as in any normal investment.
However, there is also potential for financial gain depending on the
organization's credibility and other factors.