SECURING THE PATH TO ICO
As ICOs continue to disrupt traditional capital raising, ICO HeadStart is ensuring that backers get exactly what they pay for.
As any digital-savvy investor would know, Initial Coin Offerings or ICOs, have emerged as one of the biggest hot topics in cryptocurrency. An alternative to the traditional Initial Public Offering (IPO), ICOs are capital raising tools for new businesses or start-ups where in exchange for funding, investors receive ‘crypto-tokens’ that function as shares in the company. According to Coinschedule, in 2017 alone a total of 211 ICOs were launched globally, raising a total of almost US$4 billion. With over 40 ICOs already launched as of February 2018, this new form of capital raising is showing signs of becoming a permanent fixture in the digital age.
However, ICOs are still largely unregulated, allowing virtually anyone to collect funds with the mere creation of a simple white paper. As a result, fraud occurs on a regular basis, with many projects failing to deliver on their promises. Unsurprisingly, this has led to investors becoming increasingly sceptical and a number of legitimate propositions falling through the cracks – a trend that came to the notice of blockchain enthusiasts and serial entrepreneurs Nawid Habib and Aleksandar Martinovic. Realizing that illegitimate ICOs were taking resources away from those with real potential, they came together to devise a way to help the blockchain community access only the safest and most promising ICOs on the market: a platform named ICO HeadStart.
Curating Credible ICOs
The idea for ICO Headstart was sparked in 2016 when Nawid and Martin began investing in ICOs as a form of hobby. Speaking about their experience at the MillionaireAsia Blockchain & Cryptocurrency Summit, Nawid shared, “We invested in approximately 10 ICOs, of which three were legitimate and seven were not. At that point, we wondered how it was possible for such projects to raise tens of millions and sometimes hundreds of millions. So we wanted to see if there was a possibility for us to build a platform that could do some form of self-regulation.”
Their exploration culminated in a fundraising platform that measures how trustworthy an ICO project is, thus reducing the need for potential investors to do their due diligence. Backed by a team of compliance experts, ICO HeadStart conducts a stringent screening process before listing any project on its platform, which serves as a form of in-depth research into the project and the people behind it. Rationalizing the thought process behind this, Nawid explains, “The community on average is investing the amount of US$275 per person. You cannot expect a person who is putting in that amount to invest hundreds of hours for research. The platform has to do it for them.”
The ICO HEadStart Iconomy is powered by the Mother Of All Tokens (MOAT) that plays a variety of utility roles within the platform.
To ensure their seal of approval is as fool proof as possible, ICO Headstart’s screening process consists of three dedicated stages. The first focuses on evaluating the basic legal aspects of a project to ensure it is committed to reducing risk for its investors. ICO HeadStart only assigns experienced and reputable law firms in the field to conduct these checks to further compound the reliability of the check. The second assesses the project’s viability from a financial, operational, strategic and commercial perspective. Each project is rated on a scale of 0-100 for each criteria, after which it enters a risk assessment stage based on the first two protocols.
If a project successfully adheres to and passes each of the three screening stages, it receives a certification with the ICO HeadStart Seal of Approval. After this, its final approval falls entirely into the hands of the ICO HeadStart community of investors.
Empowering The Community
The ICO Headstart economy of projects and investors, or the ‘Iconomy’ is powered by the Ethereum-based Mother Of All Tokens (MOAT). All registered users of the platform exchange Ethereum or Bitcoin in return for MOAT tokens as well as voting rights. These voting rights democratize the ICO approval process, giving the community the decisive power to determine if a project should be listed on the platform. Simply put, if majority of the crowd does not believe that a project is trustworthy or credible enough, it will not be listed on the platform.
This first-of-its-kind ecosystem requires 0% sign-up fees from backers and ICO creators. Instead, it offers 100% profit-sharing. It also employs a unique buyback option where 80% of profits secured from the platform are used to buy back MOAT coins from token holders, while 20% are used to fund new ICO projects. This also ensures the value growth of the MOAT coin.
Although projects may appear trustworthy at the start, there are still no guarantees that they will meet the demands of investors after receiving funding. Exit scams are common, where creators halt the progress of the project and instead, take off with the amount raised during the ICO sale. In a bid to prevent this, ICO Headstart does not immediately release funds but instead, holds them in escrow. This involves only releasing of tokens to a successful ICO creator periodically after they achieve certain goals or milestones. These escrow contracts are individually drawn up for each ICO, catering to the needs and expectations of different projects.
Taking the level of transparency a notch higher, the platform also uses smart contracts to allow the team to closely track the performance of a project. A new technology made possible by blockchain, smart contracts are trackable and irreversible digital agreements that facilitate, negotiate, verify or enforce the negotiation or performance of a contract without the need for a third party. Not only are smart contracts much more efficient, they also minimize manipulation and fraud.
With an airtight combination of compliance expertise, crowd sourced approval and secure blockchain technology, ICO HeadStart is forging forward in its mission to foster accountability among ICO creators while allowing backers to pick out golden needles in the haystack, risk-free.
This article was first published on the MillionaireAsia Issue 47 - March 2018