How To Choose an Initial Coin Offering Like A Venture Capitalist.

Last week John told me about how he made $10,000 investing in an initial coin offering. Ignoring the last jargon he mentioned, the number of zeros caught my attention. So I got closer to learn how I could get this cash fast.
John talked about how tech companies especially blockchain start-ups raise funds by offering the first sale of their cryptocurrency to the public through an initial coin offering.
John advised me to be an early investor in an upcoming project. He said it was a sure bet. The gains advertised were irresistible. I was definitely hooked in line and sinker.
But hold on my friend. Don’t invest yet. You need to find out the basics of investing in a blockchain project.
Here are five things you always need to consider.

A Proven Business Model
The start-up must have a proven business model. This means it should have paying customers for their product and a clearly defined, upward-moving market segment. The start-up should dominate this segment by having superior technology or an excellent management team or a barrier to entry, for example, a patent. Do your due diligence on the regulatory path of the business. Ensure that the product is protected via intellectual property and that the start-up truly owns the technology it uses.

A Good Financial Outlook
It is vital for you to inspect the start-up’s financial information.
This start-up should have the potential for high revenue, high-profit margins, and a low cost of production. A start-up that has existing loans should be a red flag for investing. This indicates that your return on investment will reduce and it will take longer for you to enjoy profit benefits.

Sound Business Relationships
The start-up should have developed the right relationships or connections to gain an audience and set itself up for success. Be impressed if the business mentions the exclusivity of supply to a given big retailer or a partnership with a crucial market player who can add viability to its product or service.

Risk Exposure
It’s important to know the risks that the start-up is exposed to in its market. The management team must clearly articulate the risks and challenges the start-up is likely to face including its strengths and weaknesses in the business segment. This team should show you a convincing plan of how they will tackle these challenges and the ways they will mitigate the risks.

A Sound Team of Advisors
It’s vital to connect with a start-up seeking funding. Reach out to the management team and know them through their LinkedIn profiles. In the journey towards getting a good return, you may have to invest in mentoring the founders. You can bring on board experienced advisors who have worked for top firms and have been successful in the industry. These advisors will steer the management towards making better decisions.

Instead of relying on John’s advice and profit-enticing ads, from today, you select a start-up based on sound fundamentals of investing. This separates you from the crowd to truly research and select projects like a venture capitalist.

Please follow and like us: