At the start of the ICO frenzy, it was common for projects to be able to raise money with only a whitepaper, a team, and an idea that involved the blockchain. Very quickly, a number of projects raised money and either failed or were drawn into protracted legal disputes. As a result, the market matured and, increasingly, investors wish to see some level of working prototype before they will buy into an ICO. In many jurisdictions, having a working product makes the case for a utility token versus a security token more plausible and reduces the potential for legal issues later on.

The need for prototypes creates a barrier to entry for under-funded or non-funded projects, making them closer to traditional fundraising with VC and angel investors. In many cases, such projects need to get angel or seed funding before they are in a position to do an ICO.

Because of the demand for prototypes, a number of firms have begun offering blockchain prototyping services where they work with business stakeholders who do not have their own development team to build something they can take to market.

Depending on the blockchain system being used, there is also the need for smart contract and token development work. With Ethereum in particular, there is a need for careful testing because once deployed, the code is immutable—bugs cannot be fixed.