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What Information Investors Should Seek To See In A Whitepaper?

I have been reading ICO Whitepapers in order to acquaint myself with them. So far I have read 7 whitepapers. I would say, if I am an investor I would invest only in one project because their paper was written in a professional manner. It contains all the elements that I would like to see in a whitepaper to help me making an informed decision.

I read on forums or hear people say that there is no specific structure for whitepapers and each startup writes it differently. It is very alarming that this has been taken for granted by both the crypto community and investors alike. I reject to succumb to this argument, which has effectively led to this chaotic status in the cryptosphere and resulted in many failed ICOs and a tremendous amount of stolen funds through scam ICOs.

In an organisational context, if I wish to compare the whitepaper to any binding document that an organisaiton/firm produces then this would be the business plan. As we all know a business plan looks at a time-frame between 6 months to 3 years, ideally 2. It has a fixed structure at its core which is recognised globally, but still allows the flexibility of adding certain elements to fit the needs of each business and culture.

But why an ICO or a new startup would like to present a whitepaper or a business plan? The primary reason is to attract attention to their product or service in order to win either customers or investors or both. Also, it’s an opportunity to set themselves apart from the rest in the market by showing the uniqueness of their product, its utility and its competitive edge.

Fundamentally, it is a piece of paper to market the project in a direct, honest, sincere, reader-friendly and transparent way in order to attract funds either from banks or investors.

Further, the whitepaper should contain certain set of elements which will enable the investor to make a decision easily and quickly.

Investors like banks have a bargaining power (remember Porter’s 5 forces?) and can/should dictate what they like to see in a whitepaper, rather than just sifting through what the startup throws in the paper to make it look sexy in order to allure investors.

I am going to propose several points below which investors and other entities concerned with regulating the ICO sphere may wish to take into consideration and ask to be included in Whitepapers. Of course this is not exhaustive list neither carved in stone. Further, I will not repeat points repeated by many elsewhere about what to look for in a good ICO whitepaper.

First, the technical details.

A section should be solely dedicated to the technical aspect of the project such as the protocol, software, app, hardware – where applicable, specifications, cutting edge technology, prediction of the product’s development over a period of time, and the like.

Second, the narrative.

On this section most of non IT savvy investors will base their investment decision. Therefore, it should be well articulated.

  • A mission statement, which is well formulated and reflects real goals and values the product or service would bring about.
  • A clear and well crafted goals.
  • A clear set of objectives. These objectives should be listed and clearly defined as per the SMARTER tool and should be tied to the goals above.
  • A roadmap which reflects on the objectives. If the startup can provide another interactive roadmap on the website which shows at which stage the project is and if it is a head of the plan or behind schedule and a justification for this, this would be an added value.
  • Stakeholders’ analysis. This of course should include the competition and why the product or service of the startup is better than the competition. How the startup differentiates itself.
  • SWOT analysis. This should be written with utmost honesty, especially the sections dealing with Weaknesses and Threats. This doesn’t mean to overlook the strengths and opportunities, but writing about the other two elements increases the confidence in the startup, shows its awareness about any existent limitations, and its ability and flexibility to strategise in response to internal and external challenges.
  • Risk management/assessment. This section should clearly state how the project assesses legal, financial, economic, Technological, environmental, and other risks, and which plans are in place to tackle them.

Third, the financial aspect. Let alone the importance of detailing the distribution of token and discounts, would the startup ICO be willing to share information about the financial stability of the company with investors? Presenting documents which show a healthy financial condition would engage investors who are interested in a long-term investment in a token.

A good ICO will go the extra mile to provide all needed information in order to attract investors. The start up has nothing to hide or worry about disclosing whether it financial information or weaknesses and threats. But most importantly it should present a realistic plan based on well defined objectives. Pertinent institutions should take swift steps and assume an active role in regulating the ICO environment in order to restore investors’ confidence in the field and assist them in making sound decisions.


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