1. Intro: the end of an Era
Let’s state things clearly: the second half of 2018 was the end of an era.
It was the end of an era for the ICO dream, where, with the advent of regulations and mistrust, teams could no longer use a few colorful pages on a White Paper to raise millions of dollars within a few hours. The end of an era for the legendary crypto-volatility, after the stabilization of Bitcoin and Altcoins suddenly shut the road to 100x returns on a crypto-investment.
The second part of 2018 showed us a story made of undelivered products, of failed projects, of broken teams – and as a consequence, the Blockchain space is now maturing, and participants are demanding that concrete questions be investigated, and answered, before believing in a new project. This is the case particularly because almost each ICO in the sphere is launched by a startup, with all the traditional risks involved – and the success of each one of these projects, especially the most idealistic ones, is determined by the Founders, by the Team, by the people behind it. Thus, it’s not only ideas and visionaries anymore – but real characters in a professional company, with knowledge, team dynamics and solid expertise.
2. Look at an ICO – Invest in a Team
People have stories, and Blockchain startups do, too. Now, in order to reduce the risk of a bad investment and to detect the most promising ICOs around, let’s kick off the main elements needed to be analysed in initial research, in any related ICO risk assessment. The team, the advisors and the founders behind a project have their own experience, their expertise, their own personalities, character and culture – and they all need to match with each other for a project to succeed.
“As an advisor I actually have a talk with some of the team members to see if they are all on the same page and to ensure that they are aware of the ICO space and their business model.”
-Capt Savio Gomez, Ph.D
Management team: the essential part of blockchain company assessment
Before talking about how to assess an ICO in general, before any other technical/financial consideration – we should start by considering that C-level executives and Founders are human beings, and as such, they need to go in the same direction, and have the same, clear vision about how their product should look like in order to make it work. This will save us from Beatles-kind of situations where each goes his own way.
Here are the main questions you need to investigate:
- Experience in previous management positions is extremely important. Check if they’ve had experience operating large budgets (millions of dollars) – and why they left their previous positions to join a new project.
- Have the C-level executives worked together in the past? Relations and synergy between C-levels are very important.
- Have they founded any startups in the past? What happened to them? If they failed, does it seem that they learned their lesson? A failure isn’t a deal-breaker, unless it is for you.
- Business network and social awareness (influencers, etc.).
- For each of the C-levels: Is this the right person for this role in this project. Are they moving out of their core competencies? If yes – there should be a good reason to do so.
- A balanced team should include specialists with experience in the target economy sector, management, finance, marketing, legal, development, sales, investor relations, strategy, the blockchain market, strategic and technical specialists.
- If the business side is strong, but tech weak, or vice versa – yellow light. Another yellow – is the tech side proficient in the business vertical as well as DLT?
- Pay great attention to the hierarchy in the project – all responsibilities and functions must be clearly divided between team members.
Try to consider all possible gaps in available human resources and make sure that the team is aware and plans to fill them. If somebody is missing or there are any team weaknesses – the advisors should cover that gap – it’s obligatory.
Advisors should not be just names on a White Paper: advisors are a critical part of every successful project. Not only do they need to be concretely involved and understand the scope of the company, but they also need to provide their expertise in order to balance the team, cover the above-mentioned gaps or industry experience, and guide them as a wise uncle in moments of panic or doubt.
About Advisors, never forget to ask yourself:
- Do they have a strict role?
- What is their reputation, experience and expertise?
- Have the advisors had any relation with the other team members in the past? What was it?
- How much did their involvement cost? And to what degree they are actually committed? Make sure it’s not just a media personality or a marketing instrument to gain credibility.
Always cross-check all information about Team members and Advisors when you assess ICO Teams, make sure that they are what the whole story is about.
Previous history of successful funding rounds
As we said, Founders, Team members and advisors have stories – just like everybody else. In the startup world, beside their relationships, personal experience and connections, these stories translate into some kind of Business history – successful or not.
- Has the team been previously involved in an ICO?
- What funding have they raised?
- Did they receive any support from VC’s, Angels, or other more traditional rounds of funds?
You should always be able to answer all these questions in order to make a rational decision.
Transparency and communications
This is a set of questions to consider and don’t take anything for granted:
- Communication with investors and the community is important, but how does the team facilitate it? Who is in charge? What is the vibe, and the attitude, with which the team communicates? Are they positive, friendly and transparent or shady, and arrogant without an actual reason?
- And again about transparency: what kind of reports are published? And with what frequency? Cross-check past and new reports: does it seem that the team manipulates the information? Have they acknowledged mistakes? Are you comfortable with the amount of internal information you gained?
- How is the team working? Is the business side visible, are the developers posting their work anywhere? Are the leaders also working on projects elsewhere, and if so, how much time can they devote to this project?
- Relations with sanctions lists, criminal activity or criminals, fraud schemes etc.
3. ICO assessment tools and resources
As you can imagine, all pieces of the information mentioned above are scattered across the web. Until now: Kepler Finance gathers the key information you need in a one-stop platform and prevents you from wasting hours or days on research across the web. It gives you a decided kick-off in starting your initial research – but there are also other important resources you may be considering in order to assess teams at best.
Here’s a list of tools which you shouldn’t overlook during your Blockchain risk assessment research:
- Social media: Linkedin, Facebook, Twitter, Medium
- Company/ICO Website
- Personal blogs
- GitHub, ProductHunt
- Crunchbase, Websites of related businesses, Community resources
“Do lots of research, ask lots of questions, see if the people have real & long existing profiles on linkedin/ twitter / medium or did they just arrive yesterday.”
– Simon Cocking
With all these sources, you can reach a rational decision about the project and the team you’re thinking of supporting. But again, always remember to cross-, double- and triple-check your results, distinguish paid and non-paid resources, dates of publications etc. In conclusion, as a reminder, always assess an ICO before investing: data-driven assessment, that’s where the non-romantic 2nd era of Blockchain begins.