Valuation of Early Stage Startups (Part 1) – Overview for Investors | Crowdwise Academy (315)
Minister of Information of the decentralized blockchain state Decenturion, blockchain expert and investor Nikolay Evdokimov talked about how to choose the right startup, what to look for during the ICO and how to invest in order to achieve maximum efficiency.
The expert says that when project evaluation to determine the optimal investment option, it is worth relying not only on the existing unified scoring systems, but also to do «homework» yourself. Although it may take hours or even days to analyze a startup, depending on its depth, in the end it will help determine its investment attractiveness and maximize its performance..
The assessment includes a lot of elements, but they are all grouped together. First of all, you should pay attention to the intersection of the audience of token holders and project users:
«We must always understand that a startup — this is a business, an ICO is a part of this business, and if an ICO is already being held, then it should solve the problem of not only funding, but also attracting users».
Next moment — it is the implementation of blockchain into business. This factor reflects how well the blockchain is involved in internal processes. This, in turn, attracts not only novice crypto investors, but also professional ones, which also affects future success..
However, the most important element, of course, is the token economy, which includes supply and demand. To analyze demand, you need to understand how the principle of its growth, the business itself, what is the market position of this startup and what problem it solves. In this case, the study methodology is similar to the venture one. It should be understood that demand reflects the growth of the user base, turnover and the transfer of a significant amount of cash flow, providing the token economy and funding.
It is necessary to study the possibility of producing mix transactions in which the investor is simultaneously the owner of the token and the share of the project. In this case, you can simultaneously participate in the cash flow and business income, which can be based not only on the token, but also on the classical distribution of dividends. A mixed deal can be discussed with a startup directly without equity participation if it is planned to purchase a significant amount of tokens or when entering the project through funds that may receive special conditions.
Don’t forget about risk reduction. These are, first of all, escrow services, which open up access to funds for a startup only when certain results are achieved. Risk hedging can also be discussed with funds.
Analysis of documentation, marketing campaign, legal component and technological base will allow assessing the project’s ability to work in these areas. If at the most important stage of life (during the ICO) the project is doing well, then with a high probability it will continue to do so after.
Direct communication with the project team should not be underestimated. Even if there are answers to all questions of interest in the documentation, interaction will determine the involvement of founders and employees.
«Now, in fact, the most golden age is opening thanks to the blockchain, which allows you to multiply your funds many times over. And all I urge you to do is spend time and do this, let’s say, homework yourself. This will allow you to raise your investments, understand the product, become involved in this new business sector, which in fact, in addition to profit, will bring a lot of additional things. You will become part of an ecosystem, part of an emerging market», — He speaks Nikolay Evdokimov.
Expert believes that the ICO market is now at an early stage of development and the real hight is yet to come. Scope regulation and member accreditation gradually increase stability and make it more attractive.
Youtube channel Nikolay Evdokimov about investing in ICO.
You can ask Nikolai Evdokimov a question on the site, in Facebook or Telegram.
The ICO investment market continues to grow at a very fast pace. Blockchain projects raised $ 11.8 billion in the first five months of 2018.
text: Ivan Malichenko, photo from the personal archive of Nikolai Evdokimov