The 5 Types of ICOs You’ll Meet

“One of my companies is going to ICO,” he offered, eyes bulging, with a gush of confidence that proclaimed ‘I’m soon-to-be-awash-in cash’, but was capped, ever so slightly — if, perhaps, you had a trained eye — with a hint of unsureness; of affirmation-seeking; of potential doubt.

Of absolute certainty that he hadn’t the faintest idea what he was talking about.

The ICO market couldn’t be hotter. There isn’t a corner of a technical conference that isn’t filled with the louder-than-it-should-be whisper of the latest ICO.

A trend that fills the unholy triangle between the gold-rush of the Internet, pre-IPO option repricing, and the technical showmanship of a magician’s favorite practiced trick.

The only thing faster than the pace at which ICOs became the latest fundraising golden child, is the rapidity in which they are evolving. They’re like some bastardized 4,000 frame-per-second version of a Kafka-esque metamorphosis, shifting from a caterpillar to the pupae to adult butterfly in a searing 300-mph blur of light and sound and color.

For the investor, ICO mechanics have become a lesson in artificial scarcity. Initially, you could just invest in the pre-sale. Then it was an advisor sale before the pre-sale.

Then it was the pre-sale before the advisor sale, but after the pre-pre-sale. At this stage, you could probably leave a pile of cash on the curb in front of Boston Seaport’s One Marina Park Drive, and it would somehow reveal itself as an ICO honey trap, providing the casual passer-by with tokens to a company that doesn’t even exist yet.

But fear not, Potential Investor and Eager Entrepreneur! ICOs are starting to fit particular molds, with steel-hard designs as distinct as the shapes of grandma’s sugar cookie cutters.

Here are 5 types of ICOs that are undeniable:

1. The Money Hogs. Usually excellent ideas, delivered by smart-as-whip, but clearly unsophisticated teams. Case-in-point: Tezos, whose playground drama is playing out in real time. $232M raised an an ICO, by 2 perfectly engineered founders describing a technical feat of strength. They create a supposed impartial 3rd party foundation to host the money, protected by their hired gun, who they now describe as a bonus-seeking, lining-padding money grubber. Everything hangs in the balance, perilously close to cliff’s edge — and somewhere there exists a pile of cash that would make a Dubai prince blush.
2. The Big Swimmers. But for every potential scam, clouding the crypto industry like a ponzi-man’s shroud, there is another astoundingly real opportunity. The tribe at Circle checks all these boxes. Led by Jeremy Allaire, an entrepreneurs-entrepreneur, Circle was formed in 2013, early even for the crypto set. They’ve raised $132M in venture capital, and have been spending it wisely: tinkering in their figurative basement on block-chain enabled payment technology. Their whitepaper for their upcoming ICO of the Centre global payments protocol is justified, candid, clear, and articulate. But it’s also something much more important: realistic. It details a problem that is right here, right now; via a team that has the technology, capacity, and cojones to do it.
3. The Wannabes. Don’t look now, here comes an entrepreneur who is failing to raise venture capital. They still have the swagger, and the blind-as-a-mole resolve to make their startup succeed. The VC door is closed? So what, they’ll just ICO. Their white paper is less of a technical triumph; it’s more a manipulated, buzz-word-laden, marketing manifesto. Their team may be good, but thinks the Token they’re getting is a book that describes Hobbits. You should walk with caution: there are so so so so so so so many of these right now that if you don’t tread carefully, you’ll be wiping one off your shoe.
4. The Four Leaf Clovers. All rise! All hail the Victor! Here stands a triumph of art and will. Recent 4LCs, like Boston’s Airfox, were 8-months ago saying, “now what?”, then rationalized an ICO when crypto-fanatics were bath-salts-and-flakka-crazy seeking something that had enough merit to pour capital into. 4LCs are good ideas with solid leaders, saved by the luck of the irishman to build for another day: to hoard enough cash to survive the undoubted nuclear winter that is still in store for the crypto landscape (before a phoenix-like rebirth to transform every aspect of our financial and economic ecosystems). There are dozens of upcoming 4LCs, many worth taking a look at. As they say: smoke some spice and invest through the right end of the pipe (I don’t know who says that, but I kinda like it).
5. The Diamonds in the Rough. Let’s talk about Sia. 4–6 guys in a garage (ok, I don’t know how many guys. And they’re actually in a house. In Cambridge, MA), who probably could have solved immortality…or human cloning…or what really comprises the 27% of space labeled as Dark Matter. But nope, they decided to work on the blockchain, and developed some of the most ridiculous decentralized file storage technology you’ll ever set your eyes on. You know when they talk about the S-curve and technology transforming an industry — this is it, and Amazon’s AWS group is 1000% watching it like a hawk. Sia didn’t fall trap to the early ICO bubble; rather, they eeked cash into tiny bundles that would buy each team member 3 packs of ramen and 1 bottle of shampoo a week (ok, that’s probably not true, but it really sounds good). What is true is that their concept of SiaFund and SiaCoin are revolutionary. Pay attention VCs: this is the mating of equity-structure and tokenomics and will give birth to your term sheet of the future.

Some ICOs are Four Leaf Clovers

Ok, yeah, I can tell you’re feeling pretty good right now. Like you have a grasp on this whole ICO thing, right?

What? What’s that you say? You’re still feeling a bit pekid, a bit “less than yourself”; unsure, unclear, or generally uninclined. Ok fine then, here’s the rulebook on ICO evaluation:

1. Know the team. They must be experienced or engineers. Or both. No in betweens.
2. Know the Technology. If possible, it really should already be built. No dream-heavy “maybe laters”.
3. Evaluate the offer. Is it too good to be true? Don’t “it probably is”, me.
4. Run for the Hills. If none of the above match. And bring your day job. Since you won’t be getting rich quick, you’ll need it.

Stand by, I’ll be ICOing this article shortly enough.