ICO stands for Initial Coin Offering. When an investor invests money in an ICO, he gets a certain number of tokens of the cryptocurrency of that ICO depending on the rate. The company can make announcements about the total number of tokens that will be produced ever on their blockchain. Initial investors can expect to make huge profits if they find the business worthwhile. The company can continue holding a certain percentage of tokens with themselves and offer a percentage of a total number of coins in the ICO for investors.
It is similar to the concept of IPO(Initial Public Offering), as both are used to raise capital from the market. However, there is a fundamental difference between an ICO and an IPO. With IPOs securities are issued in the name of the investor. With ICOs, the investor owns tokens or coins, and their value depends on the interest in the startup, technology and many other factors.
