Topic: How to evaluate an ICO similar to how VCs evaluate Startups (Read 213 times)

Thanks for linking that website Cluster2k.


I've Inputted your feedback riderinred .

Thank you for your feedback and suggestions riderinred! I agree with your advice. I'll add those to the post as soon as I have time  .


Yes it's unfortunate that there are so many scam ICOs. Combined with a lack of restrictions as to whom can invest it really creates a situation where the impure of heart can profit significantly from the inexperienced.


That's a great point. Until securities are made properly legal, tokens with those properties just have another element of risk. And the reason that so many Startups fail is due to great ideas that people just aren't interested in.

With more than 80% of ICOs being confirmed as scams, it is difficult to justify the risk/reward in 99% of available ICO investment options.

The list you provided is very detailed and extensive.
In my experience there are so many ICOs that checking this list every time I come across a new ICO would be very time consuming.

I'd advise you to add that one should/can first check if the ICO is addressing a real problem.
Only if they address a real problem, their website looks good, and they do not plan to raise an absurd amount of money ($10M+) I would start going through the whole list.

Aside from that nice work!

You can track ICOs right here : http://www.coincaps.ai/crypto-ico/active

To provide context, a VC (Venture Capital firm) is an organisation which actively seeks out projects and businesses which have the potential to generate significant returns at some point in the future. To varying degrees, everyone who invests in Cryptocurrencies is seeking to invest in coins that they believe will either significantly rise in value and create a positive impact. While many of us would like Cryptocurrencies to be separate from traditional financial institutions, I (as have many others) conclude that we can make far more informed decisions as to what we should invest into if we were to implement & modify some aspects of what Venture Capital firms use to evaluate Startups.

When a Venture Capital firm listens to a pitch from a Startup, they essentially mark them based on:

1. The problem they're addressing

2. The solution to that problem

3. The size of the market that the Startup is entering

4. The level of competition that they'll face when entering the market

5. The reputation, experience and skill of the team, and;

6. Their business plan

To that end, below is a list of questions that I modified and refer to when I'm personally evaluating an ICO that I may potentially invest into:

1. Is this ICO addressing a real problem which is severely affecting a specific segment of consumers? This should be the first thing you look for. If they're not addressing what you believe is a real problem, then it's probably not worthy of your investment (thank you riderinred!)

2. Does the solution that the ICO propose address and solve the issue that they are mentioning?

3. Is there a sizeable market that the ICO could feasibly obtain a share of? If there isn't, who is their target customer base and how will they persuade them to use the ICO's product?

4. Who are the ICO's main competitors? (If the ICO says they don't have any competitors, they either haven't done their research/lying or are the first in their field. If they are genuinely the first in their area, then you have to be extra sure that they are addressing a problem and that their solution is something that individuals will use)

5. Does the ICO have a well-rounded team that has experienced and highly reputable individuals? And does the team have all of the skills required to make their project a success?

6. Is there business plan well detailed and realistic?

For ICO's, you also need to consider these questions:

7. Does the Token which the ICO is selling have strong utility value?

8. Is the Token designed to increase in demand/value as the project becomes more successful?

9. Is their website highly responsive and look presentable? (Thanks riderinred!)

10. Are they only aiming to raise as much as they need? (Thanks riderinred!)

11. Will the project provide equal to or more value than the money it is asking to raise around the time that they're aiming to launch their coin on exchanges? If not, does their seem to be enough hype around the project for the coin to increase in value once launched on exchanges? If the answer is no to both of those questions, then you're most likely better off waiting until the coin is on a crypto exchange, as you'll most likely get it for a cheaper price. It also lowers the risk for you as the project has passed the exchanges checklist.

If you are short on time, it would be best to check off questions 1, 9 & 10 at first. If the ICO that you're looking at checks off those questions in your eyes, then you can go through all of the other questions. (Thanks riderinred!)

If the answer is no or you are unable to find sufficient information, it is always best to contact them for further details. The way that they respond to your queries can also help you in determining if they are worthy of investment, as a company which treats their (potential) investors & customers well is far more likely to succeed.

While it can take specialist knowledge to answer the questions above fully, I've found that if I refer to the questions above when looking at a particular ICO, I can form a strong opinion as to whether an ICO has the potential to succeed. By using these questions, I have also been able to avoid investing in many scam ICOs.

In conclusion, I believe we all have the knowledge and the gut instinct required to make successful investment decisions when it comes to ICOs. I hope this post helps you in your future ICO investment decisions. Please let me know if you have any questions or feedback, I'm always happy to help and to learn more from my fellow peers .