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Surely you’ve heard the buzz about ICO’s. In case you haven’t, an ICO is an Initial Coin Offering. The acronym refers to the method by which some startups raise funds for their new cryptocurrency ventures. If you’re looking for a fresh new way to raise money for your business, an ICO might prove to be a worthy investment. However, take care to choose an ICO wisely.
Browse any ICO listing database and chances are you’ll be immediately overwhelmed. The number of organizations choosing ICO’s over traditional VC fundraising has skyrocketed in the past year. This uptick is partially due to the past success of some key ICO’s. Other token-backed organizations hope to replicate those wins.
An abundance of choices is a good problem to have. However, abundance can still be problematic. For the new crypto investor, it can be difficult to distinguish between coin offering listings. Further, it can be mind-boggling to determine which projects are worthy of further research and investigation.
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Obviously, the more information a potential investor can amass and analyze, the better equipped said investor will be to initiate a strategic investment. But realistically, it’s highly unlikely that every hopeful investor has the time or energy to comb through every last sentence in the whitepaper and vet every technological nuance.
However, there is another path. Don’t drive yourself crazy trying to become an expert. Don’t try to comprehend all of the technological distinctions between the multiple organizations listed on an ICO review site like ICO Reports. Instead, assess interesting ICO’s based on the following five factors.
Similar to the VC world, when it comes to attracting investors, team trumps almost everything else. Yes, of course investors want to see strong product implementation. However, product development can evolve and progress. But if a team appears to have inherent problems, it’s unlikely that they will be able to successfully grow.
A 2017 Stanford study looked at how venture capitalists make decisions. The study’s report concluded that the abilities of a founder and flanking founding team members outweigh other factors when it comes to a VC deciding whether or not to back an upstart. ICO investors can apply the same methodology when choosing the next projects they want to support. When teams are passionate, multi-dimensional, and agile, it usually means they’re a scrappy group willing to work to bring their vision to life.
As we mentioned before, the ICO marketplace is growing increasingly crowded. Further, many projects resemble one another. For example, there are numerous ICO’s dedicated to end goals such as cloud decentralization and AI development. With so many overlaps, it can be tough for investors to choose between one or another. Look for an organization with a strong and singular vision, even if it’s similar to other listings. This should be a key factor in the assessment phase.
No ICO can thrive without a community of supporters. Many successful crypto companies were built on the backs of community evangelists who spread the word about the potential of an emerging team and technology. Community-building strategies, including a dedicated community manager, create buzz around an upcoming sale. Additionally, they also solve transparency concerns and forge deeper relationships with potential users.
It’s human nature to inherently trust a product or service more if someone we know and respect has already used or bought it. The same can be said for ICO’s. When potential investors see successful entrepreneurs and technological analysts listed as advisors to up-and-coming token projects, it immediately quells suspicions. After all, if a widely respected entrepreneur sees potential in this team’s vision and product, then any investor will likely feel more confident about investing during the sale.
If an organization cannot answer the question, “Where would you like to be in six months?” they likely are not ready to publicly launch. A published roadmap forces a new coin-based company to strategically consider the steps they must take to finish product development. Further, they will have a good idea of when they need to begin testing. They will have a date in mind for eventually launching to the greater public. You should be wary of organizations that have not taken the time to map out how their company’s future. Further, company leaders must show an adequate understanding of how the money they plan to raise will boost these developments.
The ICO landscape is volatile. There is no way of predicting with absolute certainty which coin offerings will succeed and which will fail. But you want to put yourself in a position to make the savviest investment decision possible. Therefore, ensure that the ICO’s you’re interested in have passed in these five evaluation areas.