10 questions ICO investors should ask themselves.
So how do you know if an Initial Coin Offering (ICO) is a good investment? Using traditional methods of free cash analysis, the tools investment professionals use to evaluate IPOs, aren’t of much use. This is mainly because most ICOs aren’t fully formed businesses yet and most are still projects without a product. In many cases, you’re investing in an embryo of an idea. Therefore, there’s not much in the way of historical precedent to help you make a decision. On the other hand, the crowdfunding nature of ICOs presents ample opportunity for the investor who’s able to both spot a good idea and identify the likelihood of that idea coming to fruition. The ICO has allowed everyone to become venture capitalists. Until the ICO, the average investor only saw a good idea in the rearview mirror, once it was launched by VCs with deep pockets, and was taking the world by storm. So in order to better arm the ICO investor with the tools to evaluate an investment, here’s a list questions venture capitalists will usually ask themselves before considering getting behind a company:
1- Does the technology solve a problem?
2- If the solution relies on blockchain technology, does it NEED blockchain technology to be successful?
3- What sort of experience do the founders have?
4- Who’s on the advisory board? Do people you trust believe in the project?
5 - What is the total amount of tokens issued and how much of a float is there? How much are the owners keeping?
6- What is the competition for the same idea?
7- How big is the possible ecosystem that could be built, and if it’s a platform, what sort of businesses can be built on it?
8- How big is the community and how much support do they have on social networks?
9 - How many tokens are being held in reserve and for what purpose?
10- What kind of token is being issued and do you understand the economics of that token?
Oh, and one more thing- Caveat Emptor!