The difference with the issuance of shares issued by companies that are listed on the stock exchange (Initial Public Offering, IPO) is that ICOs are accessible to every smaller investor. Because of the higher risk, the yield can also be higher than with a traditional IPO. According to the speakers, including Jan robert Schutte and Harry Klip from the Crypto Academy, a good ICO can give a 'return' of at least 2.5 times the deposit, and they were still on the cautious side.

The CryptoAcademy seminar will discuss the conditions that a good investment in an ICO must meet:

1. Spread the risk

Invest in 20 to 40 ICOs. Better to invest 100 euros in 10 different ICOs than 1000 euros in 1 ICO. Not all ICOs, however, are equally profitable. By keeping a spread of 20-40 ICOs, there can be a number of loss-making, this loss is compensated by the ICOs that are profitable.

2. Be critical of the technology

Is there really a blockchain needed for the product. Try to find out if an extensive database might also be sufficient for the product. When a database is sufficient and there is not necessarily a BlockChain technology is required then it is wise to be critical with regard to the ICO. Often the Blockchain is then called in to justify the ICO (read: to collect more money).

3. Do research on the team behind the ICO

Does the team have a large network? In which business did the team work for it? Did they earn money with their previous business? Has the team worked together successfully before (new team members who have never worked together can be a risk). Selfkey and IceCat (ICURY) are examples of an existing company that has issued an ICO. What is the operational management: as soon as money has been collected with the ICO, what will the company do, a good product has to be developed. Are the advisors really advisers and not as a figurehead paid for their name and photo during the sale.

4. Is there an MVP (Minimum Viable Product) of the ICO?

At what stage is the project? If the project has already been fully elaborated and there is a working product before the ICO, the chances are greater for success. A product / company that has to be set up from the very beginning after the ICO is a greater risk. Find the balance between good ideas that can become a success and more established companies that already have detailed prototypes and are already in business. Assess the potential and see if the company can anticipate and have opportunities to take another turn if the initial phase turns out to fail. The development of a product can also develop with input from the community, are companies willing to listen to this input via social media for example?

5. Is there a soft cap on the tokensale?

Is there a soft cap? Do you, as a private individual, get your deposit back if the lower limit is not met? What is the hard cap? What is the maximum amount of investment for an ICO? When the hardcap is too high, there is often no shortage. Then the price can plummet because there are too many tokens in circulation. Assess what the ICO needs the money for: keep in mind that the upper limit for the team can be up to 40% of the total revenue, preferably max 10% -30% for the team the rest for business operations and development of the project and putting the product on the market. View the roadmap of the project in the Whitepaper.

6. Invest in the presale or private sale

Try to invest as much as possible during the présale or privatesale. The earlier during the sale you can participate in an ICO, the higher the 'extra' bonus. This presale bonus provides an extra number of tokens that can put a good base on the deposit, so that any price decrease after the launch can be partially compensated.

7. Join a 'buying pool': more knowledge, more capital

Try to find a group that makes purchases together during the présale or private sale phase. A so-called 'group / pool buy' provides extra bonus that can once again be a bottom in the event of a price drop. Ask friends and acquaintances if they know a reliable poolbuy.

8. If necessary, wait for a 'listing' at an exchange

If you are not sure about an ICO, you can also wait with the purchase of the tokens until they are available and are called on an exchange. This way you can safely enter the moment an ICO comes on an exchange. Keep an eye on this by subscribing to the newsletter of an ICO, after the token release it will be announced on which exchange the coins are available.

9. Do not like 'FOMO' sentiment

The amount of hype and positive sentiment can be read from the activities on social media. FOMO: do not go shopping in fomo, but some form of hype can be a positive signal. See if there are recent twitter posts from the company, which is a good sign that there is engagement with the community of an ICO and check on activity and number of participants in the Telegram channel.

10. Do a substantive and editorial check on the whitepaper

Is the whitepaper substantive, technical and linguistic? The ICO whitepaper is actually the prospectus. There should be no spelling errors in this and legally it must be correct what has been written. Through Github you may be able to view how many updates there have been regarding the technical part.

11. Always send your ether to a wallet that supports ERC20 tokens

Do not send ether or NEO from an Exchange for the purchase of an ICO, because it is not visible that it was sent with a private key, and that is necessary when purchasing an ICO.

Author's Bio: 

Misty Jhones