I have been investing in ICO albeit selectively. Why? Even though we hear of ICO that returns 10,000%, and by hitting that single ICO, we would probably gain back all our losses for those less than average ICO. I do not see things that way, my investing style has been to pick a small number of investments and have a focused portfolio; much like the way I invest in stocks and shares. A focused portfolio allows me to spend more time to study each investment thoroughly and make sure I get a hit every time. Moreover I prefer to keep my investments over time and do not really like to actively flip.
Hence I have developed a quick criteria for myself to shortlist ICO for possible investments. If I like the ICO after evaluating the below 3 criteria, I will spend even more time to read through their whitepaper, follow their twitter and other social media and keep track of all the chatter on bitcointalk; like it or not, keeping track of the ins and outs and gossips of each ICO has become an critical part of ICO investing. Often the success of an ICO can make or break based on a rumor; for that matter even a presidential election can be won or lost by a unsubstantiated rumor.
For this discussion, I will be using the example of Change Bank to discuss my methodology.
Business model
The first criteria is the business model. The business being offered by the ICO company must first of all be justified to be on the blockchain. There are just too many businesses jumping on board the blockchain trend when there is just no business case for it. There are plenty of such cases, just google yourself. For Change bank, I like their business case. They are proposing a decentralized banking service for crypto currencies. I for one love the fact that I will be able to store all my crypto currencies into one wallet and not have to manage individual wallets for each of my coins. A decentralized bank will also mean that there will not be a big traditional bank leveraging my money and making large sums while returning me a paltry 2 or 3% interest. Definitely a business case.
Backing
The second criteria is whether there ICO has a strong backing from leading advisors and or institutions. This criteria sounds so oxymoronic as it suggests that trusts stem from a central body which is the very idea that crypto currencies are moving away from. But such is the way of our current world, we continue to ascribe value to individuals or institutions with credibility. For Change bank, they have a few pluses here. They have the ex DHL CEO Mr Roger Cook backing them and they have 2 important institutions behind them; Microsoft which is represented by their Financial Services Lead and the Estonian government's e-Residency programme. This is a very big attention grabber. One of the key reasons why I am jumping on board the Change train.
Team
The people behind the ICO is probably one of the key determinants of whether they will deliver on their promises. I would prefer that the ICO be lead by individuals who has demonstrated an in-depth understanding of blockchain technology and who has succeeded in their respective fields. For Change Bank, this is where they are slightly behind other teams in the blockchain world. The team is young and dynamic; from what I have read about them and from their responses on their telegram group. But they are not as experienced in blockchain technology as other teams. But luckily they make it up by bringing on board experienced advisors such as Rob Findlay from Next Money as well as David Moskowitz from Indorse. A very good balance of experience and dynamism. If I get 2 out of 3 of these criteria clamoring for my attention, then I will delve myself into more in-depth research. In this case, my attention is definitely piqued.