4 Criteria For Evaluating Blockchain ICOs

Blockchain, Finance, ICO

William Mougayar is the author of “The Business Blockchain”, a board advisor to the Ethereum Foundation and a venture investor.

In this opinion piece, Mougayar offers his thoughts on a new blockchain use case being evaluated – and used – by entrepreneurs as an alternative to traditional venture capital.

Initial cryptocurrency offerings, or initial coin offerings, (ICOs) are the flavor du jour in the sprawling crypto-tech market.

As I’ve described in previous writings, ICOs represent a fundamental shift in how companies get funded, at least when compared to the traditional venture capital driven methods.

What I inferred from that post is that the way forward is a clever combination of both worlds, the old and the new, a point that Zenel Batagelj from ICONOMI picked-up in “ICO 2.0 – what is the ideal ICO?” – a good post that I strongly recommend.

For background, I’ve already described the “best practices for ICOs” in a lengthy post two years ago. Its lessons still apply, but for a new reason: there are several more ICOs today than in early 2015.

I’d like to expand my own thoughts on how to evaluate an ICO by categorizing the criteria along four dimensions:

  1. Startup characteristics
  2. Operational transparency
  3. Crypto-sale resiliency
  4. Business model relationships

Arguably, the bar is higher now because if you want to comprehensively evaluate an ICO, you need to look at some new dimensions.

But at the same time, the bar can appear to be much lower because no one is forcing new investors to examine these four areas with the same required rigor that venture capitalists typically exercise, and specific ICO regulation appears to be lax or non-existent.

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