If you’re a crypto project founder and you’re just assuming how VCs would view your project, how are you going to ensure your success in crowdfunding? An old saying says, know yourself and know your enemy, you will win every war. I hope this article will help ICO project teams understand what VCs are really looking for in a project.

I had a pleasure to speak with Michael Noel, CEO and Co-founder Blockchain Consultants, Blockchain Weekly Host. Michael is a well-rounded leader in the areas of business development, product development, technology management, and operations. As a technologist, publisher, entrepreneur, and Blockchain professional, he looks to demystify and simplify the process of Blockchain Implementation. During this interview, I discussed with Michael on how to understand VC’s mindset in investing in blockchain projects. I hope this interview could be inspirational for you if you’re in the process of crowdfunding or trying to understand investor’s mindset better.

Question: Part one for VC investing is the “will we invest” question. In part one, what are the fundamentals VCs are looking for in a project? You have a lot of experience in venture capital. Can you help us understand VC’s mindset in regards to ICOfunding?

Michael: We need to take a look at the investment in the American stock exchange. Value depends on the value the business gives to the economy or the money it makes on multiple ways, earnings. With ICO, it’s not there. People rush into it and get hurt. What’s the value tech brings to the society? Then we need to understand what the value blockchain is, so it can help define the future value of it.

For example, Bitcoin’s value is in that it can transfer easily, across border, just about everywhere. Ethereum has smart contract, different workflows. NEO provides an environment people can build coins and do different things. What’s the fundamental value behind a coin? People are not paying attention to it yet.

Question: If VCs focus on the team and idea, what kind of questions they may have in their mind to ask to find out the answer for that?

Michael: For the team part, VCs look at due diligence. In traditional money raising, what people research on first to invest? VCs like to find out what the company is doing, what their fundamentals are. In ICOs it’s different. All the info are published. The website should have the updates of the fundamentals, such as what’s the white paper, what’s the value proposition, what are you going to do, what are you looking to be sold, how far have you gone, where are you at the process, what is the market place. And then VCs will look at the team on LinkedIn and find their reputation. People doing ICOs are completely ignored their LinkedIn profile.

For the idea part, VCs look at the fundamentals. How do you know if an ICO is good or no? And VCs need to understand the value proposition in the marketplace and how it is going to change the market. If it’s a VC guy, he will focus on something he knows, current holdings he has, or business he’s familiar with, or has been employed for quite some time so he understands the fundamentals .

Question: VCs just started to get into the ICO investing world. How do you see the current situation of VC funding in ICOs?

Michael: VCs are trying to treat ICOs as IPOs, but they are different. For example, a website — ICOwatchlist.com, it tells you exactly what the coin is and the status and info about what it’s doing, their crowd sells, whitepaper. The fundamentals are ignored by the VCs for the most part. For example, what country is it from, who is the founder, what’s the team behind it.Can you find these founders on LinkedIn? Are they real people? People aren’t looking at the info available. In this perspective, ICOalert.com is another good source.

VCs are not experienced in this field. No one is looking at the fundamentals and they just throw money into it and hope there’s something that’s going to happen depending on the luck. In order to do it right, you need to understand what the ICOs are and what the fundamentals of smart contracts and blockchain.And understand how the whole industry is going to be affected. And then they can discuss what are the fundamentals and what it’s going to be.

Question: What is your standard or philosophy on evaluating an ICO?

Michael: I have a private equity background. I’ve been in private equity for about 30 years. I like to look at the ICO value in product. Is it going to solve a problem? Also I have 4 points I look at. For example, is the problem the project is try to solve evolves with transfer or trust?

Question: Can you explain on that please?

Michael: The idea behind the ethereum or smart contract has more value than all the ICOs or coins out there in the long term. In order to play long term, a player in this field needs to understand the smart contract, which will replace the contract. Because they do it in a intuitive way, automatically, without intervention. This is the most powerful part in blockchain and one can get the most info and value from.

If an ICO is done unclearly in smart contract and just grow in value, and try to communicate with bitcoin, then run away from it. If an ICO has value and has some pitch to it, and there’s smart contract and there’s value in the smart contract, and smart contract evolves with transfer or trust, also in the workflow it includes things like people in the system are trying to gain the customers, change the pricing, trying to hold back of the pricing, or have job assignments like agents or workers, then it’s a good project. If there’s a lot of money in the transfer, it’s a good one. And if a product of an ICO can make the process simpler.

Is there transfer, trust, are they sticking together or if people in the transfer trying to hold it back ,is there value in the transaction and the resulting tool that makes things faster. Then should take a look at. If it doesn’t fit into it, he moves along to other ones.

Question: For VC investing, part two is “how much”. For part two, how do they evaluate a business and how do they decide how much to invest? What do you know about it?

If this is not a strategic opportunity, and the crypto doesn’t solve a problem one of your key holdings has, then probably don’t invest. You should be able to find enough opportunities that deal directly with one or more of your holdings.