Topic: ICO Due Diligence Process - Look beyond the simple stuff (Read 88 times)

Good advice!

Another thing to consider is the size of the community that they have accumulated. Check things like the size of the telegram channel, are the team members engaged in conversation?

Don't be lead astray by good branding and well-made videos! Anybody with capital can hire a highly skilled team to assist with these areas, look further than the surface and assess the potential economic outcome of the idea put forward.

Also, you can use tools like clearify to validate the ICO address (of course, only after you have carried out your due diligence) - https://www.clearify.io

There have been hundreds of posts on how to spot a great ICO. The simple basics are;

• Read the white paper (I am not sure if people do this, it sometimes don’t look like it)
• Understand what is unique, how will this project be different to what is already out there (copies don’t live long)
• Make sure it is a legit project and not a scam
  

Then you also need to look beyond some of the key stuff that a lot of people use as quality preferences. Whenever I read about ICO Due Diligence two main factors are brought up over and over; ICO listing sites and the advisors. The more sites you find an ICO on the better is the project, and the more advisors the better. This is far from true, and people need to be aware.

ICO listing sites; People list their ICOs in listing sites as part of marketing. Most of these give the supporters no idea about the quality of the project (some rate projects, but at the same time make a statement that they take no responsibility…). Many even ask for money, so it is in fact paid advertising. The more you pay the better they make your project (or scam) stand out. So don’t trust ICO listings, this is a tool to find projects, they do not rate the quality of the projects (contrary)

Advisors; Most people might not know this, but advisors are not taken on board to help the investors, contrary, their job is to ‘protect’ the project and the people behind it. IPO’s (stock offerings) always use advisors (I guess this is where the idea came from for the ICO world), their role is never to look at after the investors, their job is to raise as much money as possible at the best deal possible for the company (and the worst deal possible for the investors). I don’t mean to say that all advisors for ICOs work like this, but there have been several projects which have no bright future and many of these has high profiled advisors. Also keep in mind, ICO advisors often get paid a % of the funds raised, so the more they sell the more they make. It would at least be better if the advisors got a fixed fee upfront and this was public information.

I did not address the team, even if they are the most critical part. The simple reality is that some of the best ideas, most valuable businesses, was created by unknown people. So don’t rule out an unknown team, do the same due diligence as with a well-known team and you might find that the unknown team has a better business idea.