Last 12 months have seen an unprecedented influx of ICO’s, that have transformed the fintech market and the way new companies fund their future business plans. 2017 brought a new breed of investor into the cryptocurrency landscape – one with minimal experience and knowledge, but the willingness to invest in a product, or service that had yet to come to fruition.
ICOs offer people the opportunity to put their money into an unfinished project in exchange for that company digital tokens or coins. This differs substantially from an IPO which offers accredited investors private stock of a company.
Unlike traditional stocks, cryptocurrency is highly volatile and rapid, increasing demand for tokens can cause an incompatible rise in their so-called intrinsic value. Comparison of some recent statistics will offer a better perspective on the huge gulf between crypto and traditional assets. The highest performing stock in the S&P 500 rose by 132% in 2017 whilst one of the top 20 best ICO performers rose by over 20,000%.
Here’re the most important factors for ICO participants to consider:
Eventually the success of an ICO will usually be determined by its potential to change something within the industry. If an ICO solves a real problem of an industry, chances are that this ICO will meet its funding goals quite quickly. ICO on more niche markets or subjects are less likely to hit a larger target or attract big investors, as it is considered riskier.
Core team and its integrity is one of the strongest factors in the potential success of any project. Most ICO websites should have its team in plain sight with links to LinkedIn profiles. Sites that do not offer much info about its team have a higher level of risk due to the seemed absence of transparency. It is certainly advisable to research team’s CEO, founders, advisory board and core members before an investment is made. The advisory board in this case should fill any gaps in the skills and share the same vision with the team members.
The Whitepaper is the core technical document behind every ICO, thus should carry considerable weight and information. A standard white paper should offer readers a very detailed document consisting of:
- Overview and Executive Summary;
- Market research and analysis;
- Product details and summarised architecture;
- Roadmap and Financial forecast;
- Structure of token offering.
It is very important that the whitepaper is proofread carefully and any particular questions are directed at the team’s management.
The type of solution, area or industry that the ICO is involved in should translate to the funding targets that they are trying to achieve. If a crowdsale has no hard cap limit then this can be an indication that this ICO might be looking to raise more money than is needed for its development.
If a project has already achieved substantial private funding, that can be a sign of the potential of the project. For example, Telegram recently secured a record figure, in excess of over 800 Million USD from private funding alone.
Another good example of ICO that meets all the necessary points is ImmVRse, the hybrid decentralized platform for VR content. Basing on the points above, we can carry out a brief analysis:
The Industry of VR is one of the most rapidly expanding ones in technology, so we know that there is large consumer interest. Market research from the likes of Goldman Sachs and Gartner show that the industry will grow to between $80b to $110b in the future.
The ImmVRse project showcases considerable experience, skills, and Industry knowledge. The project’s founders have a background in IT, Finance and Marketing background. The project’s advisors are respected specialists from Legal, Blockchain, and VR, who act as a great support to the experienced core team.
The project is in-depth and shows considerable insight into the industry, untapped potential and offer a very informative expose of the potential future of VR and VR content. The whitepaper also contains a coherent and detailed plan on how the company projects it’s success following their attainable funding targets.
Finally, the crowd sales token structure follows industry’s standards with a carefully thought out allocation of funds, whilst the roadmap ensures alignment with.
We believe that every accomplished, or novice investor should analyze each ICO in much the same manner, before investing in it. This way they would be at least more sure (if not completely) that their money will not be simply wasted.