The term ICO stands for “initial coin offering”. It is a way for blockchain projects to raise funds by issuing and selling their own crypto-asset, either to investors or to potential future users of the project’s new platform or product.
ICOs are seen by many as an exciting and important new means for direct capital raising through tokenization, and as an enhancement or even replacement for the venture capital model. By "democratizing" venture capital, the ICO can provide interesting investment opportunities to a broader range of investors, including retail investors, than is possible today. On the other hand, as with blockchain technology, the ICO phenomenon is very new, and largely unregulated. That can make it difficult to properly evaluate investment opportunities, and also differentiate serious projects from scams. ICOs raise significant legal, tax, regulatory and consumer protection issues, many of which are yet to be solved. Absent a strong regulatory framework, investing in ICOs can carry significant risks, and no one should ever invest more than they can afford to lose.