What is a soft cap in Initial Coin Offerings (ICOs)?

A soft cap in Initial Coin Offerings (ICOs) refers specifically to the minimum funds required for a project to move forward. Reaching this threshold is often crucial for the development team, as it indicates a sufficient level of interest and investment to justify starting the project. If the soft cap is not met, the project may not proceed, resulting in a lack of funds needed for development, marketing, and operational expenses. This serves to protect both the developers and the investors by ensuring that the project is viable before moving forward.

In contrast, while options like the maximum funds that can be raised are relevant to the financing structure of an ICO, they refer to a different concept known as a hard cap. Similarly, the allocation percentage of tokens or the total participating investors speaks to other operational or structural aspects of an ICO but does not define what a soft cap specifically entails.