Analytical factors - how to find a good project for investment?
Before investing in the next ICO, look at this list and ask yourself the following questions:
📌Does the ICO site use the https protocol? If the team did not bother to install the SSL certificate, then what security for the project as a whole can there be?
📌How does the site look? What is the overall impression? Is it credible? Do not it look like it's made "on your knee"? Are the contact details given in full?
📌Is there a whitepaper on the site and how detailed is it? Today it is difficult to imagine, but there are sites without this element, which has already become a standard in the ICO industry. Is there a whitepaper in several of the most popular languages? If the team wants to collect the announced amount of investment, then it should count on users from different countries. What does the whitepaper look like? Is there enough information about the project and the rationale for entering the ICO, thereby ensuring future profit for investors? Is detailed business plan of the project and necessary technical details described? Less buzzwords, more digits.
📌How much money does the team plan to collect and why? It is good, if the whitepaper indicates the planned expense items of funds raised. Pay attention to how much money the team wants to attract. Now, some projects call huge sums only from greed, and they do not really need funds in such quantity to realize their plans. It's some difficult to spend a few millions of dollars at once, and keeping them in one crypto currency is unsafe because of high volatility, so it's good if the team mentions in whitepaper some way of diversifying the funds raised for their greater safety.
📌What problem does the project solve? Will it be useful for millions of people from around the world, will it solve their problems? Does we implement the project in general? It should not be a "space elevator", but not a "another chat" - there should be a golden mean between the benefit and ambitiousness of the project. Sometimes it's good if the project is somehow connected with the real economy and offline business, but not always. Here the main criterion is the economic feasibility of the project and the certainty that it will be in demand. Also, it is worth paying attention to projects that expand the infrastructure and make BTC and ETH work better/faster. It's reasonable to avoid projects where the blockchain is not at all necessary and "pulled by the ears" - it is very likely that in such cases the team often simply wants to raise money.
📌Does the project have competitors? Now there are very few truly revolutionary ideas, and most ICO projects are only skilful integration of existing products with a blockchain-ecosystem. It is good, if the project has at least 2-3 competitors or projects from the related field, and this is either successful projects, or those that are also at the stage of raising funds, or at least prototypes in the form of a classic business. Why is it important? Because if there are no competitors at all, then, most likely, there is no market, and such a product is not needed by anybody and is economically unprofitable. Either this is a brilliant new idea, but such a chance is much less likely.
📌Are bonuses for early investors on pre-ICO is not too high? In some ICO projects, teams offer huge bonuses to attract early investors. If you managed to get into their number - you are lucky. If you do not have time and the ICO bonus differs significantly from the presale bonus - it's better not to invest in this project, but you can buy tokens on the stock exchange. Why? It often happens that early investors sell tokens immediately after entering the exchanges and receive instant profit at the expense of big discounts with which they bought tokens, and the rate falls 2-3 times from the price of ICO.
📌Is the maximum amount of funds (Hard Cap) limited? If not, then this is an alarm signal. If the project collects too much money (as much as it does not need to achieve the stated business goals), then it simply has nowhere to grow. Capitalization of the project can easily grow from $ 10 million to $ 100 millions in next time, but from $ 100 millions to $ 1 billion - it is much more difficult. Such projects sometimes become financially sluggish, and the team is losing motivation - why go on working hard and develop the project if you have already collected more money than you can spend? Also, pay attention to the total number of tokens - it should not be too large.
📌Is the initial price of tokens is not too high? And what is it generally justified? The smaller the initial price of tokens, the higher the "psychological" growth potential. Agree that it is much easier to grow a token from 10 cents to 1 dollar (x10 growth) than, for example, from 10 dollars to 100 (the same x10 growth);
📌Will the project team gradually buy tokens from exchanges? A good practice is if, after the completion of the ICO, the company plans to gradually buy out its issued tokens back from the exchanges, using part of the profit for each specific period of time. Due to this, the rate of the token can grow.
📌How will the tokens be used in project? What are they for and do they really need in reality? It is good, if the token is really necessary for the project's work, and it contains a certain scheme of its value growth. If the token is used only to attract investment, then the team should have a clear plan of how exactly it will bring profit to investors. A common option is to charge "dividends" for tokens once in a certain period. Thus, the company will share part of the profit with the holders of the tokens and will be attractive to investments. Sometimes for many early investors this is a good way to get some passive income if the project is successful in the future.
📌Does the project team looks trust? Ideally, these people should be experts in their field, who already have the experience of successful implementation of IT-projects. Equally important is the balance in the team between the number of technical specialists and managers/marketers. If there are only "sellers" in the team, then they can give the development to outsourcing and this is not always good. If the team is one of the developers, then there may be problems with sales and promotion of the ICO project and with the attraction of investments.
📌How open is the project to the community? Look, is there a source code for a smart contract for github? Is there any statistics on the volume of attracted investments in real time and what information about this is on ehterscan? The larger the number of investors - the more likely the tokens will be distributed evenly and the less volatile will be the token rate after entering the crypto-exchanges.
📌Has the project been financially and technically audited? Some teams are attracted by independent audit agencies, as well as information security specialists (or announces an additional bounty campaign to search for bugs and vulnerabilities) to increase the credibility of their projects by potential investors. After this, the team can publish short results of such studies on the site of its ICO project and in whitepaper.
📌Does the team have a working prototype of the project? The short history of ICO contains many examples where talented teams attracted investment only for the landing-page and mocups of the future project, but the scam among such projects is usually even greater. If the team has at least a minimum workable product (MVP) - then this is already a good sign to think about investing in the project. If the team already has a successful IT-project, and they just want to integrate it with the blockchain ecosystem and raise additional funds to expand the business and enter new markets, then this is also a good sign.
📌Does the project have advisors? If not - then this is an alarming sign. If there is, it's already good, but it's worth looking closely - what kind of people are they? It's great if they are recognized leaders of the blockchain industry, but far from all projects can boast the support of such people. For small projects, there will be enough support from good recognized experts with a large profile background.
📌Are venture funds interested in the project? If there is an official information about investments from some well-known venture investors or "business angels", this means that this ICO project has certainly undergone a thorough audit by people who are willing to invest in the project really big money and believe in its successful future.
📌Does the project have a detailed roadmap? Look at the whitepaper, at what stages is the implementation of the project broken, do the timelines look realistic? What exactly and for how long is the team going to implement and how soon will MVP be ready (if already not)? Remember that the faster the team realizes its business plan, the faster the project will start to make a profit and the sooner tokens will start to grow in price.
📌Milestone and the team's step-by-step reward. Some teams lose motivation to work hard after successful fundraising, so a good tone is considered if the additional token remuneration of the team is broken into several specific stages related to the previous point - the road map. Very cool, if the holders of tokens can somehow vote for whether the next stage is implemented or not. An alternative option is to keep borrowed funds from an independent organization (escrow), which partially gives funds to the team after each milestone implementation. In this case, the team receives its tokens only after the successful completion of the next stage of project development. The more intermediate stages, the better, because the team will not be able to immediately sell a large number of its tokens on the exchange, negatively affecting the price of the tokens.
📌What is the news background for the project? How often does the team upload news and articles about its project in social networks and on profile news portals? How do these news react to recognized crypto-investors and blockchain specialists? Are there extensive reviews on this ICO project on the well-known crypto-news portals? What about it is written by independent rating agencies and ICO calendars? Is there a real, rather than twisted, hype around the project?
What an Usefull and Great Article. This helps me to understand how to invest. I have searched to article like this because I want to start to invest in many ICOs. But I still don't do it because of my very little knowledge. And if you and allow me, may I translate this article into Indonesian and post it there
Best Regards
