It is a known fact that the crypto industry is full of issues. It is becoming ever more difficult to see a profit from financially supporting an ICO project. More and more crypto-startups are scams or unoriginal, founded with a single aim – making money instead of developing technology.
There are thousands of reasons not to trust these projects. In 85% of cases, the token prices fall after the ICO is finished. The media is full of articles that describe scam projects, fake teams advisors, and copy-pasted White Papers. It is also common for potential investors to become a reason for these problems and, of course, they deny it.
A few years ago, before the ICO-format of crowdsourcing appeared, startups tried to attract investments from venture funds, banks or private investors. To get at least 10% of the required amount of capital, the teams had to prepare a huge number of documents, such as business plans, explanations of the projects’ income and their usability in the market, competitive ability analysis, and more.
However, the investors had to prepare well, too, before supporting the project. They had to analyze the market, the interdependence of supply and demand, and all the possible risks.
So, before choosing a project to invest in, people must do a lot of research. Here is a list of factors that are important for each investor to know.
- Macroeconomic analysis
- Market analysisMicroeconomic analysis
- Technical analysis
- Regional analysis
- Field analysis
- Risk and income analysis
- Finance analysis
- Valuation of market activity
- Market rate forecasting for the company
These are just a small part of everything investors should do before making a final decision about a company. And they did so.
What about the ICO industry now? Investors don’t take it as seriously as they used to, because the blockchain market is more open and accessible now. Anyone can be an investor and everyone wants to be. ICOs let all people support the company of their choosing, no matter where they are located, what they do for living or what they believe. There are a lot of usual internet users who give a penny for a single token, hoping it will turn into millions of dollars in a few years.
As a consequence, it creates a situation where people with limited knowledge support inexperienced and ill-prepared companies.
Some common mistakes that ICO investors usually make:
- Not reading the White Paper carefully;
- Trusting opinions of the bloggers they follow (in fact, ICO companies sometimes pay them for the ad)
- Submitting to marketing influence (media, emails, banners);
- Not analysing the project’s competitive abilities;
- Not analysing the technical paper.
It is important to understand that marketing instruments are not necessarily something negative, rather that marketing is a method of communicating information to people as consumers. Many want to get profit from investments by buying and selling tokens in a short time. However, it doesn’t work without analysis, making it necessary to dig deeper.
To start, it is good to analyze the following facts:
- Project team;
- Activity rate of users on social media;
- Originality of the White Paper;
- Market analysis;
- Project competitiveness;
- Economics of the project’s token;
- Project benefits outside of the blockchain context;
- MVP (Minimum Viable Product);
- Juridical aspects.
Thus, the more research and analyses an investor does when choosing an ICO project, the better his chances of success and profit become. To make investors’ lives easier, TheFund.io developed the artificial intelligence Axon, which allows users to find all the necessary information about the project. Axon does the research for the investor, then creates its own database and organizes a scoring system. As soon as Axon finishes its work, a team of professional experts and analysts recommend a final decision based on the information the AI has provided. This technology is certain to reduce investor mistakes.
Market trends are variable, so the basic factors of investors’ choices should also change. To make this happen, investors have two options: follow the research standards themselves or trust the machine if they don’t have enough time, knowledge or experience. For the ICO industry, artificial intelligence might be the best road to avoiding many investing mistakes.
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