How to Avoid Losing Your Money by Investing in Startups or Life Hacks by funds OLPORTAL.ai Follow Oct 23, 2018 · 5 min read

There is also a misconception that investing brings some easy money. Wrong, wrong, wrong! Your revenue from this financial activity is overly dependent on your knowledge, analytical thinking, and perfect sixth sense or intuition. It is hard to move among all these existing projects alone, synthesizing and absorbing necessary information for an analysis. An individual can take the right direction in investing and select proper projects on their own, but he or she had better be armed with life hacks on choosing an appropriate startup. For this reason, we have compiled a list of criteria to avoid losing your investments by choosing a wrong project. We have talked to our advisors and ambassador of the OLPORTAL project, who are also representatives of different foundations. They are Ajay Prakash (managing partner at Qubit Capital), Sash Jeetun (co-founder of Bluefin Berkeley), Derick Fiebiger (founder, CIO of Arturo Capital). They answered three questions below to provide you with priceless knowledge:

What criteria for choosing projects do funds have?

How do funds estimate risks?

How do they learn about new projects?

Let’s find out the main hacks for good investing, provided by these experienced people.

Criteria for Choosing Projects

When foundations analyze a certain project, they pay attention to the following aspects of selection:

The value a project can bring to people. How does this idea work for long-term investments, and whether there is a demand for this concept in the market? (this is clear from a comparison made between a project and its closest competitors, for example). There must be a reason for using/buying tokens of a project. Ajay Prakash, the managing partner at Qubit Capital, has his own strong opinion regarding this point: “Will market demand translates to demand on the token. For example, if the token provides access to a certain platform — will there be easy adoption for this token (fiat gateways etc.) and will it translate to buy demand (i.e. tokens are purchased and distributed with validators or network participants).” The team behind the product, its executives, heads, and company’s affiliates are also under the watchful gazes of foundations and hedge funds. It is also great if a company’s CEO and executives have participated in a successful project before. It is hard for no-name teams to earn trust. The hard cap and soft cap of a project shall be fully realistic, taking into consideration the sphere of the application of the ready product, its targeted audience, and what segment of the market it is aimed at. The developers and heads of a project should set realistic figures for a hard cap and soft cap. Are there good reasons to hold tokens of a project? It means that if a project does not incentivize users and holders, in particular, with a certain percentage for keeping tokens, nobody will buy and hold tokens of such a project. Token economics plays one of the most essential roles in determining the investment attractiveness of a project. The value of a token (within the project), its distribution, and price are included here. A good token economy can provide a proper tokens’ circulation in a system and on exchanges. The hype is also crucial for every project. But here one should be careful in selecting a popular project. Public, social media, and investor communities will be buzzing about a project if it is good enough. The strong and active community and live Telegram channel of the project will confirm the popularity of its idea. A working go-to-market strategy is a very important criterion according to which foundations decide what startup to choose for investing. The developers should make sure that the roadmap of their project has all necessary milestones to achieve so that their customer community will certainly benefit from each step taken to create a well-performing product. Founders’ backgrounds and their accessibilities are included in a must-have list before making a decision in what startup to invest. Leaders of the company should have enough experience and qualification for managing a really good project. Partners and seed investments. The more reliable partners with big names cooperate with the project, the better it is. Other necessary aspects for indicating a really good startup are prices and goals of a seed round (the major part of foundations enter any project mostly in the very beginning of the campaign). If a product has raised the stipulated amount of money for the seed round, this fact can also be considered positive when choosing a startup for making money.

How do foundations estimate risks?

Nobody can give a strict list of rules to estimate investment risks to you, as each individual, company, group of investors, or foundation has their own secrets or methods to stick to.

According to our ambassador, Sash Jeetun, co-founder of Bluefin Berkeley, everybody should do their own research before giving a project their money, besides funds are always looking for the opportunity of an early access:

“Regarding risk, we think everyone should take responsibility of doing their homework by doing enough checks, due diligence, ratings check on trustworthy sites and ultimately doing your own research on the project if it is viable or not, we also again consider if founders are setting the right targets and allow early access for funds/VCs.”

Actually, legal issues are the most important aspects for the estimation of investment risk. Every experienced investor and also foundations want to be sure that the team of a project will be able to produce a really well-functioning product. This can be indicated by a well-written white paper with a detailed description of the economic model, token distribution and application, and etc.

Where do they get information about new and interesting projects?

The major part of such information is taken from online platforms, ICO trackers (ICO drops, ICO bench). Highly anticipated projects are always discussed within certain crypto communities. Besides, recommendations from some trusted influencers may also bring ideas for investing. Derick Fiebiger, founder, CIO of Arturo Capital, offers to use not only ICO trackers and specialized crypto news sites to find new projects but also some other online sources publishing news about novelties in the techno world (Bloomberg or TechCrunch). But one thing’s for sure, if people talk about a project everywhere, on social media, in Telegram, and also in chats, this product is worth being scrutinized.

However, don’t stick to only one method when evaluating how a project may be beneficial for your investment expectations. The more sources you use to find startups, the more chances to succeed you have. Remember to stay cold-blooded and reasonable when conducting extensive investigations in search of a proper project. For a better analysis of the OLPORTAL project, you may be taken to our official site olportal.ai. Follow our social media to learn all the news faster.