Most of the investors, who want to invest in cryptocurrencies or ICO’s are often confused, with regards to what should be looked into a project before deciding to invest.
Through this blog we are going to tell you the factors that should be kept in mind before you decide to invest in an ICO.
The type of project:
ICO projects are mainly of four types – Blockchain Project, Platform, Protocol and Dapp.
Blockchain Project: These types of projects are made from scratch and are often developed in order to bypass the issues of scalability that the current blockchain faces. Dapps, platforms and protocols can be built on top of them.
Platform: These types of projects are either made on Ethereum blockchain or any other existing blockchain. With the help of platform, the developers can easily make a Dapp on top of it.
Protocol: Through protocol, users can make their own Dapps or platforms
Dapps: They are distributed applications created on top of platform or protocol.
Project stage with respect to prototype:
The project can be in either of these three stages
Concept stage: Here the idea of project exists on white paper
MVP/Prototype: Here a prototype exists which can be used or checked by the user
Alpha/Beta Testing stage: Here alpha or beta version of product exists which can be tested by the user or the developers just before the project is launched.
Partnerships:
The number and type of partnerships a project has, is very significant.
If the project has partnerships with traditional companies in the sector that it’s planning to operate, then that’s an advantage to the project- for e.g. a blockchain project that’s based on ecommerce having partnership with traditional companies like Amazon, e-bay etc.
Secondly, we have projects where upcoming projects partner with existing blockchain companies for synergy and strategic alliances
The last type of partnership is strategic partnership where venture capitalists like Sequoia, Andreessen Horowitz invest.
Competition:
Before investing in any project, it is important to know the kind of competition the project is going to face. If many similar projects are out there in the market, then it means that the project has high competition and in such a case it is important to find out a differentiating factor which will set apart the project from its competitors. On the other hand if the project has low to no competition then it means that it will get the first movers advantage.
Team and Advisors:
All the major team members especially CTO, CFO, CEO’s past experience from their graduation to their last working experience to their leadership qualities and the type of position they have held in their recent working place also counts. It also helps to know if any founding team members have had successful exits from any other company that they might have started or co founded. Apart from this what also matters is how powerful the advisors are, if the advisors have been involved in large companies in the same sector and the position they held.
Whitepaper:
If the white paper is able to explain the technicalities of the project in an easy language, then it gets easier to understand for an investor as well as a layman as compared to when the whitepaper is tougher to understand.
Relevance of the Project:
This refers to how important blockchain is for functioning of the project.
Token Details :
Various details about the tokens play an important role;
Hardcap:
Generally a hardcap of about 30 million is enough, and if a project has a higher hard cap than that, one needs to investigate the reason for it.
Percentage of Token Sale: The percentage of tokens that are up for sale is also important; anything above 50 percent is good
Percentage of tokens for team and vesting period: The total percent of tokens kept aside for team as well as the time period for which it has been locked is essential as it shows the amount of power the team will have over the projects ecosystem. Vesting period is the amount of time the team’s tokens will be locked up for. Vesting period of about 24 months is feasible.
Social Media Hype:
Since most of the conversations about ICO’s and blockchain happen on Twitter and Telegram, it is important that the projects followers be checked on at least these two social media sites. High number of followers implies large number of people are interested in the project and are aware about it where as low number of followers means the opposites.
While it might get confusing for any potential investor to look into the above parameters simultaneously , luckily for them our ICO spreadsheet exists where upcoming ICO’s have been scrutinised on the above factors and a score has been given to them, higher the score, better it is for investing.
You can check it out at similar Ico spreadsheet at the given link:
Please do comment your opinions..