So what is an ICO?
For those that don't know, ICO stands for Initial Coin Offering. It basically means that a company is seeking early investments for a product they want to produce. They set certain goals (Soft Caps and Hard Caps) and ask investors to send in BTC or ETH in exchange for their coin. The investors have to wait until the ICO either hits it's goals and finishes, or the length of the ICO comes to an end, in order to get the coins they purchased. Investing through the ICO allows you to get their coins at a discounted rate, and usually with some 'Bonus' tokens.
There are plenty of gambles with ICOs
ICOs seem to be springing up all the time recently. Sifting through which ones are legit and which ones are fake isn't easy. It's also a difficult decision to pull the trigger on whether or not to give a company your money in hopes to get their coins/tokens when the ICO is complete. The product may not live up to the hype and kill the price, leaving you with worthless coins. And the biggest gamble, they might be a scam and run once the ICO is finished. I'm no financial advisor, so invest at your own risk, but I'll share some of the things I look for in an ICO before I make a decision.
How strong is the team behind the ICO?
Take a look at the developers, founders, advisors, everyone on the team. Make sure they have a background in what the say they are. Look at the companies they've worked for, if they have were part of any completed projects. People with little to no background and left during projects are red flags. Even go as far as looking at their Linked In to see if they are legitimate.
Market cap matters
So we all know market cap, and amount of circulating supply, dictates the price of the coin. If you have an ICO trying to raise 500,000,000USD, that's a massive market cap that will take a lot of incoming money to move the price. The lower the market cap, the larger it can grow, and the more valuable their coins will be. ICOs looking for 50-70million are good bets.
Fundamentals Matter
Look at the short-term and long-term problems the company wants to solve. Think if they can even be accomplished in that time frame, or think if there are already better solutions out there. You want to make sure you have a good reason to invest in that coin.
How hard is it to invest in the ICO?
Some ICOs are open to anyone and everyone who is willing to buy their coins. Others are harder to get involved with. You may have to join an email list weeks prior to the ICO going live in order to participate. It may be limited to a certain amount of participants. You may have to buy in at a minimum that may be too much for most people. Normally unmet demand means the ICO has better potential.
ICOs that don't reach it's Hard Cap may be big gainers
I mentioned in the introduction Soft Caps and Hard Caps. A Soft Cap means an ICO has a minimum amount they need funded in order to continue with the ICO. If they don't reach that Soft Cap amount (Say 2 million USD), the ICO will be shut down and the money refunded. ICOs also have a Hard Cap, the maximum amount they are seeking funding for. If an ICO hits the Soft Cap, but fails to reach the Hard Cap, that means it has better room to grow once the ICO is complete. Remember, the smaller the Market Cap, the more the coin can increase value.
Does the ICO have a working product/prototype already?
This could be both good and bad. In the sense you could be missing out on huge gains. To ensure a smaller risk in investing, ICOs with working products/prototypes are a safe bet, because they can guarantee something tangible. However, companies like Cardano (ADA) and IOTA currently do not have a working product, but they are amoung the top Market Caps.
READ THE WHITEPAPER!!
This should automatically be the first thing you do when you are looking at any coins/token to invest in anyways. The whitepaper should tell you everything you need to know about the coin and how they plan on accomplishing it. Again, the whitepaper will tell you if there are other coins already out there doing what this coin wants to do.
These are some websites you can check out to find ICOs and upcoming ICOS are icodrops.com icoalert.com and crushcrypto.com