Recently, there is a craze in the ICO space. As many people can see from ICOstats.com, the returns are phenomenal.
I believe that capital raised from recent ICOs is simply not justified.
Consider the recent TenX ICO, the hard cap is 200,000 ETH for 51% of the token, consider these msgs from Slack:
The capital raised simply does not justify future growth.
Consider ICOs from a business perspective that most startups fail.
There are also questions that leaves ICO investors with many unanswered questions:
Who is on their board of directors?
Do they have any independent directors?
What is the acquisition cost per customer?
What is the lifetime value per customer?
Can they acquire customers profitably?
What is the burn rate per month?
How does that scale with new users?
What are the key metrics to measure the business?
What is the gross margin?
What is the net profit margin?
What is the current valuation of the company?
What is the current cap table?
What is the lockout period for the early angel investors and Fenbushi VC?
etc...
Essentially, how do you justify a company that is pre-revenue with an MVP (minimum viable product) with no traction is raising approx. $70,000,000 for a small percentage of transaction fees that may or may not happen in the future?
These are just some of the many questions that one may ask when investing in a company, in this case, worse as we only hold tokens. ICO investors might ask why these are important, clearly, if the company cannot make a profit and go belly up, investors cannot benefit from 0.5% transaction fees from holding the tokens.
Also, investors have limited control over the use of proceeds and this is an unproven business model without real traction. A very risky venture indeed.
Investors whether angel, VC, or in public companies need to do their due diligence whether in TenX or any other ICO.
Simply investing in an ICO without doing the proper research or doing so without a clear picture due to lack of information is plain foolish.
Actually, I shouldn't even use the word investing as it's purely speculation or gambling.
Disclosure: I have not invested in TenX ICO nor do I plan to.
None of this makes sense right now. It's people throwing money at a wall of ICOs and hoping some stick. This is similar to the dot com bubble. Sure it will pop, but until then there will be many people making a killing off these ICOs. In the end only the strongest tech will survive and come out on top to be like the Google's and Microsofts in the world of blockchain.
My thoughts exactly. It's a zero sum game. Someone will be holding the bag when it pops.
Nice article! As to investing in ICOs - pretty much the wild west out there.
The TenX token is more then Fishy to me.. even the are lots of things missing in the Whitepaper... i was at a LiveSteam with one of the Founders .. however he completly ingnored critical questions.
.
The Julian is the CVO, he is there just to create hype. There is no a single line of code written for COMIT ... nothing on github ... no transparency. Be careful.
Thanks for the good article
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