By Ben Marks, Blocktrade Capital
I spend significant time researching ICOs to help me make informed decisions about whether to get involved. Below are four of the key characteristics I look for in assessing whether a project has a high chance of success.
- Secure support from influential crypto enthusiasts
ICO projects are plentiful, so it is crucial that yours stands out from the rest, and having a trusted crypto source vouch for your project is the best way to ensure this. With so many options to sift through, investors are looking for those that satisfy all their requirements and have the potential to bring a stable flow of passive income. If an investor chooses to back your project, he or she has to be more than just an adviser – that person needs to actively support the project. That means consistently engaging Twitter, Facebook, Medium, YouTube, Reddit, Telegram, BitcoinTalk and any other relevant social media outlets.
- Know which themes to highlight
The technology behind your project needs to be clear and understood. Crypto has officially hit the mainstream audience, but the average person has no idea of the concept of “smart contract” or “distributed ledger.” Leave the programming language to the programmers and focus your campaign on highlighting themes that everyday crypto users connect with, like decentralization. Decentralization is the process of making critical decisions in a group by a majority vote among multiple individuals in the group. This was one of the early themes on which bitcoin was founded, and it enabled early bitcoin fans to connect with the non-technical retail-investor base. And considering the success they have achieved, mirroring their strategy is a smart move.
- The five-second rule
The project concept must be easy to explain in five seconds or less. If a project can’t be summed up in a few short sentences, I can’t develop a quick elevator pitch and I’m less likely to promote it to others. This doesn’t mean the project won’t succeed; it just means I’m not going to promote it as passionately as I would if it were simpler to explain. And when I do promote the project, I also won’t be able to radiate as much enthusiasm in my voice – or at least not enough passion to make people whip out their phones and immediately Google more information.
- Big fundraise and small fundraise
Evidence so far shows that smaller ICO-fundraise campaigns – under $100 million – consistently post higher returns for investors than large campaigns. Of the 10 most profitable ICOs so far, the average fundraise was only $12.9 million, with the single biggest fundraise being just $28 million. That’s not to say that large ones are any less profitable than smaller ones; it merely means that a successful large fundraise is no indication of future profitability.
The reason for this may have something to do with large fundraises having a more substantial number of tokens and individual investors to manage, and thus an increased chance that a few rogue players will sell early and keep prices down.
Regardless of the reason, investors need to prioritize profitability above all else, especially in these robust bear markets. Until the big fundraise token model can be fine-tuned to ensure consistent profitability, investors should prioritize low-to-medium-fundraise projects.