The interest in ICO investments seem to be taking off again, and therefore I will write what I suggest one does before investing in a project,
and hopefully, others could contribute with their suggestions!
I posted this in Beginner & Help first, but I realise it's much more relevant in 'Altcoin Discussion'This should apply to crypto investments in general, not only ICOsHowever, depending on the stage of the project you're investing in, some points might not be relevant anymore.
It's still very valid to ensure the idea, the team, and other aspects!
The ideaThe most important thing to consider when investing in an ICO, is the idea itself.
Due to the crypto boom, a large amount of companies are throwing around buzzwords like 'blockchain' and 'crypto'.
For an existing company using buzzwords like these can generate a lot of interest, as seen with the somewhat recent
Kodak announcement.
Without investigating their project by itself, it's a good point to keep in mind:
Companies are made to bring in profit, and jumping on the latest hype is a good way to gain interest. It doesn't mean it's a good, or viable, idea.Now, to the point of projects launching initially on the blockchain:This is a very good way for a company to raise funding, and it also allows people to get in on, something like 'the ground floor'.
Surely, this has proven very rewarding for many people: just take
Ethereum, the second largest most valuated crypto.
One Ethereum was less than
50 cent! That'd be a profit of roughly 1350x in today's prices, or 2750x at the peak.
Ethereum was launched relatively early(2014), in general, the average crypto-investor at that point was probably more technically-competent,
and the crypto projects in general was a bit more technically-oriented than many of today's projects.
This is important to keep in mind, when considering a project.
Does the project actually have a
reason to run on a blockchain?
Or, is it
only done for easy funding?
Last year, people seemed to throw money at anything, and any idea - good or stupid - could raise millions of dollars.
Yet, quite recently - there was the huge '
Bitconnect' scam, and
many many more projects has gone the same path.
When you're investing in a project, any project, crypto or not - it's of course always best to be knowledgeable in the relevant field.
But, it's rarely possible to be, in all fields. Therefore, it's important that you don't fall for the marketing only.
An ICO wants to raise money, and to achieve that, they'll clearly do their very best to justify their existence, as well as why it's worth to invest in it.
Look up various neutral discussions, ask around(perhaps post here on Bitcointalk), to make a better decision regarding the project's viability.
You can also use sites such as
icorating.com, forum (Bitcointalk/Reddit) discussions, and so on.
Whatever way you choose to go about understanding a project and it's use, ensure that you don't base your decision solely off one source.
In every crypto project, there's always many voices involved.People who are holding 'shares' of the project in question, and wish that other's invest to raise their own investment value
People who are holding 'shares' of the project in question, and wish that other's
don't invest in order to keep prices lower
Neither of these groups are necessary experts, so even if things sound good, try to verify from
other sources.
Look at the bounty section - people are paid in 'shares' to do various tasks such as doing positive YouTube videos, sharing social media content, writing positive comments, and so on.
This means that there's a high likelyhood that any content in relation to a project you're researching, was paid for.
Make sure you look up neutral, relevant discussions about the project, general discussions, possible issues(every project has them), technological concerns, etc.
What gives the coin/token value? Is it a currency token? Is it a token that has is tied to the project itself?A simple example would be
Binance Coin which is used to pay for fees on the Binance Exchange, thus ensuring adoption = value.
Another example could be
Nano/Raiblocks which is quite popular, and is only used as a currency.
What makes you believe 'your' coin/token will gain in value?
Be Aware of projects that
tell you how much you'll earn.
It's often scams that say things like, 3x in 3 weeks!
Companies should be focusing on their product, not on short-term gains.
What are you paying per token? Has someone else payed less? What can you expect short-term, and long-term?Many projects has '
private sales' for big investors, who gets to buy tokens at a much lower price.
This could for example be motivated as 'a sure way to reach the softcap', which might be true, but that could also mean you're making a bad investment.
The
softcap is the minimum amount needed to continue on with the project.
The
hardcap is the maximum amount.
Ensure that you're aware of this, since it's quite common for big investors to simply let the ICO run it's course, and once it's over, they can sell off a large amount at a higher-than-paid price, thus damaging the short-term value, and in extension, you would've been able to acquire a larger amount of tokens for the same price.
This is not always the case, but it's quite common.
Look if there's '
vesting periods', for example, any early-investors has their tokens locked for X time to ensure stability.
Another thing to consider is;
will a certain amount of tokens be held by the team?
If so, what prevents them from selling off a large amount? Will a contract hold the amount for a certain length of time?
It surely can benefit the
development; but not necessarily
your investment.
Be certain that you have a clear view of what's coming in the future in terms of the
supply.
WhitepaperEvery project should have a whitepaper, describing in detail various aspects of the project.
Examples of this are how the project itself will function technology wise, token economics, finance in general, distribution of funding and such.
Here, it's good if you know what you're reading about - many projects can go into deep technical detail, while it can look good, it's not always the case.
RoadmapAnother very important thing in a project in general, is the
roadmap.
The roadmap should give a general idea of when various milestones in the project will be released, such as new project-stages.
Roadmap dates aren't necessarily written in stone, but make sure there's a clear path of how the project will go forward.
Ensure that the project has a roadmap.
Lately, many projects at least has some an early stage prototype - look at the roadmap, was the goals achieved in time?
(observe that it's not super-important that a project releases on the exact day, while it's good if they do, technical projects can come with unexpected issues that delay the project).The TeamIf the project doesn't have a team publicly available, you should take that as a warning sign.
It's up to you how far you decide to dig before you determine if the team seems reliable.
You can look up
LinkedIn profiles(can be faked), you can google
reverse-image search to see if they're providing someone else's pictures,
you can dig around
Github to see if you find active developers, etc - in general, ensure that the team is there, they exist in real life, they're actually
involved in the project, and that they seem to be
capable for the project.
CompetitionThe technology behind crypto makes a lot of things possible; what ensures your ICO will succeed?
There are likely other projects working on a similar thing.
Where is 'Your Project' and Competing Projects in terms of development?An ICO is generally done in a very early stage, meaning a project is often without much actual product.
At the same time, another project, dealing with the same type of product - may very well have released their product by the time 'your project' is ready.
Do you have any reason to believe 'your project' will succeed, while other's don't?
Have a look around the Bounty section, see how many projects are quite the same?
Surely, there can be active competition as well, but one would rather bet on the winning horse.
So, make sure you
analyze the horse until you feel very confident in your investment decision.
ScamsThere are a lot of scams, and due to the nature of crypto, it's very unlikely you'll ever see your money again.
Especially, if there was never a team! If there's no team, there's noone to take action on, and again - due to the nature of crypto - funds can be untraceable.
Law can't help us, generally, at least - yet - which brings me to my final point.
How will the project handle legal aspectsA lot of the legal machinery can work slowly, and a project can't haphazardly acquire necessary legal documents.
Many projects demand
KYC; while many does not demand
KYC - which they should, for the legal aspect.
KYC = Know Your Customer, essentially providing things along the lines of a passport picture and various personal information.
This is due to things such as
Money Laundering.
If a project doesn't demand KYC, at this point in time, that is in my view, a reason for concern of the project's future, in terms of facing legal issues, and thus the projects legitimacy in general.
Scam projects could very well sell your information.
This also applies for bounties -
be careful with what information you provide!
I personally join bounties simply for 'why not', but I never join any project asking for my personal information.Other hintsGot anything to add? Please comment! 
If projects are involved with teams such as Amazix (takes cares of certain aspects of ICOs, like social media, support etc)
it's often a good sign, because Amazix does their own vetting of projects before taking them on, to determine if they're legit!
Ultimately, it's up to youIt's your money, and ultimately, no one can decide for you.
And, just as well, you can go solely off what other people say.
It's
completely in your hands to invest in good projects, and very few people will do this for you.
There are many crypto-youtubers, and as we can see in the bounty section - a lot of people are getting paid from making these marketing videos.
Same with people upvoting Reddit, sharing Twitter/Facebook, writing good comments etc -
be careful, and simply
be certain that you trust your investment, or you will likely regret it, sooner rather than later.
90% of Startups Fail.
We can be certain that this very much applies to the crypto sphere,
simply due to the nature of ICOs.
Easy funding without much to show for it, means many projects might not even be capable of 'pulling it off'.
Even the great looking projects could have given you worse return than if you simply held Bitcoin.
If you could have gained more only from holding Bitcoin, it wasn't a very good investment.These are my ideas about ICO investing, I'm certain other users has tons of things they look at, care to share your tips?
