How do we evaluate an ICO?
The fundamentals of “doing your own research”
There are no shortage of opportunities for investing in ICOs. However, identifying the great ones have been the most challenging part. Majority of those who currently invest in ICOs or Cryptocurrencies look at DYOR (do your own research) as following the nerd next to them or whichever ICO has the most members in telegram. In fact, they’re really doing little to no research at all. So you might ask, what’s the problem with this? Well, that is everything get’s funded, and I mean everything, including scams. The other problem with a tremendous hype in ICOs, is that, not only are there a lot of vapor projects getting funded by dumb money, but less people are buying on exchanges. This leads to less profits on exchange listings and more likelihood that prices fall under ICO price, as either private pre-sale buyer’s dump their heavily discounted tokens, or investors sell their tokens for a better performing coin due to opportunity cost. Unlike previous years, investors are slowly realizing the importance in researching the fundamentals of a project before funding them due to the higher risk of coins getting dumped below ICO price.
We have set a fundamental criteria as part of the evaluation process when hunting for the best mid-to-long term ICOs, as our strategy is to invest in great projects with future growth for at least a few years. Some main points that we most tend to look at include:
Business model
The business idea and structure should be solving a real world problem, and allow for mass adoption and scalability. We usually favor infrastructure projects but do like the occasional killer DApp. The target audience should easily understand your product or services without having to jump over hurdles to wrap their head around it.
Team
Your team should demonstrate technical experience, business development capacity, and knowledge of the blockchain space. Each core member should have a full LinkedIn profile of their work history, projects they’ve worked on, skills, recommendations etc. We prefer those who have experience in working at well performing blockchain companies or at established companies such as Microsoft, Facebook, Amazon etc..
Advisory board
You should fulfill the shortcomings of your team with experienced individuals who have technical or deep industry knowledge. Having good advisors can help connect you to the right people which mostly can make or break your success. Remember, your network is your net worth.
Website
Your website shouldn’t necessarily be pretty but function well and easy to navigate. You’re a tech company, a simple website shouldn’t be that hard. If you’re having problems creating a user friendly website, then to be frank, you shouldn’t be in this space. Use Squarespace if you really have to.
White paper
Your white paper should be original and introduce the problem, the solution, the product, and its technology in an organized format.
Investors care about token metrics, so be sure to make this clear. How much is being distributed, how much will be kept, how much does it cost, the duration of the sale, soft and hard caps, and other mechanisms will impact their interest.
Code and prototype
Show don’t tell. You should be able to show a working prototype and/or a demo before trying to raise more than $1M of funding. You might have a great vision or idea but can you build it? Showing a good clean code repository will show your organization and level of engineering.
Roadmap
It’s important to show your plans for at least the next 2 years with the most relevant milestones and detailed action items. It’s also of critical importance to show your progress as you complete these tasks, either through product version control or documentation.
Community
Can this project continue if you step away? You should have a good core team and those supporting the project so they can continue development even when you’re not there to manage things.
Hype
Yes, this matters too, to some degree. Hype means free marketing as nothing beats the word-of-mouth, the best advertisement in the world. The more people who know about your business, the more it can attract talent and professional network. Be aware though, as lacking to deliver on the perception can hurt the business rather than strengthen it.
If you wish to ask us questions or work together, feel free to reach out to malvin@baseround.com
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THIS IS NOT INVESTMENT ADVICE AND IS SIMPLY AN OPINION. ICOS ARE HIGHLY RISKY AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN A LOSS OF THEIR ENTIRE INVESTMENT. PLEASE DO YOUR OWN RESEARCH WHEN INVESTING.
