One of the attractions to ICOs is that traditional VC funding is very hard to come by for most of the world. If someone does not live in New York City, San Francisco, or some other major technology hub, then they are far less likely to have access to a serious investor network. With ICOs, it is possible for anyone, anywhere, to attempt to attract early-stage investment. The downside, however, is that the level of due diligence and skill of those doing the investment is questionable and the amount of credible information is low.

An ICO typically starts with the release of a whitepaper, a relatively short document going over the value of the network, the token, and future plans. Because the technology is new, and a typical ICO campaign is short (3-4 months), there is very little time and opportunity for investors to do extensive due diligence. Moreover, because blockchain based startups are not required to show financials (they don't have any), traction, or product-market fit (there is no product yet), there would be little data on which to base evaluations.

In time, consistent standards for evaluating blockchain startups and ICOs may evolve, but, currently, they do not exist.