Whenever we review a project, we look for few specific things. For instance:
- What kind of problem does this project solve?
- Does the team have the required skills to solve the problem?
- Is the problem perceived or latent or just made up?
- Is company securing the partnerships and collaborations?
- Is the space big enough to accommodate success?
- What kind of revenue plan does the company have to sustain in the long term?
These questions, although quite intuitive are what everyone needs to learn about before you put in your hard earned money.
We learned these basic tenets of investment the hard way.
You see, during 2017-18 bull run and the ICO craze that lead up to the massive bull run, we kept throwing money at every shiny piece of shite out there.
Yes, we know now it to be a mistake. As they say, hindsight is always 20/20.
We are penning these lines for those who may have forgotten these basic principles and for those who might be newbies like we were in 2017.
Either way, when you answer each of these questions honestly and find a gem that checks all the boxes, then you have found the gem in the rough.
Let's go over each of the requirements of a successful project:
Problem to solve
What kind of problem does a project solve?
Bitcoin solves the 'trust' issue. Ethereum solves the smart contract problem. Stablecoins solve the volatility issue.
What does your project solve? What makes it better than the alternatives (there are always alternatives)? If you have convinced yourself from your research that your project solves the problem better than any other solution, then move to the next question.
Team
Ideas are as cheap as 'table salt' said Stephen King.
He is absolutely right. A brilliant idea not executed is worth nothing compared to a mediocre idea that is executed with excellence.
Does the team possess the right skills to see the project to its finish line? What kind of history do they have? Have they quit on projects before? Do they have connections? Do they have prior experience of 'successful exits'?
What kind of investment did their brand name garner interest from?
Is the problem real, latent or just made up?
We are not going to let this idea of 'solving a problem' that easily. Because, it is everything for a project.
Is the problem really something people want to solve? Like for example, connecting with your long lost friends from school, and Facebook solved it.
Latent problem like - its freaking difficult to hail a cab in my part of town. Uber solved this problem.
Made up problem: You need to get 10000 likes to validate your existence. Instagram solved this problem.
Again, latent and made up problems are very difficult to penetrate into but rewards are amazing. For a real problem, there will already be a lot of solutions in the market, so your project must offer something unique, simple and intuitive.
Partnerships and collaboration
You cannot succeed alone.
This is true for every endeavor of mankind. If your project garners a lot of interest from like minded people in the world and they are forming the partnerships and collaborations, then you are looking at a potential game changer.
If no one wants to touch it with a 10 feet pole, then you got a problem.
Remember, even when bitcoin was opposed by the world, some of the brilliant minds backed it and were confidants of the project.
Is the market size big enough?
You can innovate in any market. Even those that are completely saturated. Examples of this include: Snapple, Minute Maid.
If the solution your project proposes touches many lives then it is easier to scale and grow.
If your project is into 'sub-niche' of niches, for example, a particular strain of marijuana available to customers in California only, then by its very nature the market size is going to be limited.
However, if your project is making cakes that help you shed weight, reverse age and bring glow to your skin, then obviously this product has potential to capture the global market and even being absorbed by a big brand.
Revenue plan?
If your project has amazing solution, great team to execute, a massive market to address but if it does not have a 'revenue' plan then there is a great chance that it will fall on its own weight.
Whether it is subscription, product based, or service based plan - it doesn't matter, as long as your project has a revenue plan and you start seeing 'paying customers' coming to the project.
Even an amazing project will eventually bite dust if it cannot sustain through 'generation of income'.
VC funding (or ICO funding) can only go so far.
Conclusion
There you have it guys. Basic tenets of crypto investing. Use them wisely and DYOR before you invest.
