The Seven Pillars of ICO Investing

In addition to the hundreds of ICOs being launched every month, our management company Crypto Asset Management, also receives around a dozen emails per day from new companies planning on launching crypto tokens to raise capital.

In this article we explain what we call The Seven Pillars Of ICO Investing™, which we've rigorously crafted over several years of investing in crypto and other assets.

The threshold issue is jurisdiction: in what country is or will the ICO company be incorporated and the ICO executed? This determines the rules that will apply to the company's actions and the ICO. Depending on the approach taken, we may apply the somewhat arcane rules of the Howey test, KYC/AML principles and applicable securities law.

A significant number of the ICOs we analyze do not actually need the blockchain, tokenization or a public sale of their tokens to be successful.

With the enormous amount of value exchanging hands over the blockchain and the prospect of getting "Free" money without giving up any equity, it's not hard to imagine why many industrious entrepreneurs try to identify any possible reason to launch an ICO. That being said, one of the crucial things that every investment we make must have is a legitimate reason for "Tokenizing" their business, and for creating a public market for that token.

The characteristics of an ICO can have important implications on the expected upside of the token.

In the world of token sales and short-term liquidity, people often forget that the value proposition of a company can be just as great or even greater than the token ecosystem it is developing.

Even if we believe a team is able to create a great product that incorporates a token with an imperative use case, this does not necessarily mean that we will want to hold the token or invest in the ICO. A token must additionally have a mechanism to drive price appreciation.

Market Leadership: We look to invest only in tokens that are clear market leaders, or have the potential to be in the near future.

Despite the incredible number of fly-by-night operations in the world of ICOs, it is certain that token generation events are here to stay.