Initially, the only way start-ups would raise money is to rely on investors. Things have since changed and investors can now take advantage of the blockchain network and initial coin offerings (ICO). If you have never heard or used ICOs before, this is a form of crowdfunding where business organizations create unique tokens, which other people buy to raise money for them. ICOs are associated with high risks and high rewards. To get the best of this financing option, https://arcanebear.com/makes-good-ico/ shares some essential facts to know before investing in ICOs
Read the white paper
The white paper is a document with everything about the company. This includes things like the company’s vision, the services they offer, and much more.Ideally, you can quickly tell whether the investor is serious enough or not. As a potential investor, it is up to you to go through the write and ensure you understand each detail in that document. As a tip, pay attention to the details considering that most companies often exaggerate some aspects.
Understand the project developers
Purpose to learn more about the developers before committing your money. Most companies launching an ICO are new entrants into the market. As such, the chances are that some of its developers have been involved in similar projects in the past. As such, purpose to conduct a background check on each developer as a way of ascertaining their expertise in this niche. A team without the right experience is a definite red flag. Having relevant experience serves to create some level of trust between the investors and developers, which is needed in business.
When investing your money in any project, you also need to know how your funds will be put into use. The last thing any investor would wish is to invest in something only to have their resources in embezzled by one of the developers. Thus, it is imperative to invest in an ICO where the developers are ready to share every detail about their business. This is the best way to create investor confidence.
Plan for the future
ICO tokens are mostly sold with the sole intention of helping developers raise capital. To the investor, the main attraction is the possibility of a future resale. Some ICOs give the investor a rare chance of enjoying the services offered by their company, whereas some of them are solely for raising money. Having tokens that can be redeemed takes care of the possibility of being unable to sell your tokens for a profit.