Initial Coin Offering (ICO) is a modern way using which funds are raised for a new cryptocurrency venture. It's often used when the founders want to bypass the rigorous and regulated capital-raising process required by venture capitalists.
When a cryptocurrency startup firm wants to raise money through an ICO, it usually creates a plan on a whitepaper which states what the project is about, what need(s) the project will achieve upon completion, how much money is needed to undertake the venture, how much of the virtual tokens the pioneers of the project will keep for themselves, what type of money is accepted (bitcoin, ether or actual money), and how long the ICO campaign will run for. During the ICO campaign, enthusiasts and supporters of the firm’s initiative buy some of the distributed cryptocoins with real money or virtual currency. These coins are referred to as tokens and are similar to shares of a company sold to investors in a more traditional ICO transaction. If the money raised does not meet the minimum funds required by the firm, the money is returned to the backers and the ICO is deemed to be unsuccessful. If the funds requirements are met within the specified timeframe, the money raised is used to either initiate the new scheme or to complete it.