10 Factors To Consider When Evaluating an ICO

Here are 10 factors to avoid the dangers on the way to investing in ICO. Using these principles will allow investors to find the perfect ICO and make effective investments.

1. The reality of the project
   When the investor decides on investment in ICO projects, they must remember that the rules of "real world" has not been canceled. It is important to study the technology, the product itself, the founders and not to trust the unbelievable promises of the organizers. For any ICO should be "working" product, even at the level of idea. The ICO process have to be clearly structured, including the study of the economy and legal basis.

2. Tested technology
   Even if the project is at the level of the prototype, it still needs to be a real technology. Many founders are trying to use the blockchain, even where it obviously does not apply, just trying to use the wave of "hype".

3. Proof of the ability to function
   The founders need to prove their technology or idea.
   The absence of MVP is a significant indicator of the dangers of such investments.

4. Confirmation of business ideas
   Technology means nothing by itself. The project needs to have a clear financial model. There must be understanding how and where will be making money.

5. Rational use of financing
   There are many companies that conduct ICO without having clear plan expenses of the funds collected. Often it is just a description of the development plan without further details. The more all the costs are spelled out, the more investors have reason to trust such projects.

6. Established regulatory framework
   If the White Paper and the Terms & Conditions have "white spots" or obligations of the company are not spelled out clearly, it is likely that the founders simply did not delve into current regulatory practices and can be subjected to various sanctions.

7. The transparency of the ICO
   The whole process of communication with customers, collecting funds on pre-ICO and the ICO should be as clear and transparent. If contradictions occur in the process of researching the company, it is an important factor for potential fraud.

8. Safe investment storage
   Way and place of storage of cryptocurrency and Fiat money is absolutely a critical factor. If the issue of operational safety is poorly designed, there is a risk of hacking of wallets and stealing cryptocurrency.

9. Managed expenditure of funds
   Ideally ICO should have escrow account or several persons who sign the payments towards the company only upon achievement of certain performance in the road map.

10. Deferred liquidity for the project founders
    A similar approach is used in classical financial world – lock up on the shares. The wiser the policy is worked out, the more likely that the founders will stay in the company and not sell their tokens on the wave of market.