The token must have true large scale potential
Most of the crypto investors are looking for long-term investments, that they can HODL. Picking the right coin or token is not easy because the crypto market is crowded and many new ICOs are coming up. In the crypto space, we see that many tokens are trying to solve very similar issues, such as anonymity or security, not to mention the several platform tokens. This market is very competitive, which investors are aware of so they are looking for tokens that are capable of adapting and keeping up with the competition.
We see that Ethereum is currently facing a serious scaling issue, a challenge which other coins and tokens should expect as well, as they scale with success. Third generation tokens have to figure out a way to solve the scaling issue. Essentially, when every transaction must update the distributed blockchain everywhere in the world simultaneously, performance suffers. This problem will be solved over time.
I meet some ICO CEOs that have a token concept which fits their business but that is inherently not appealing as an ICO investment because the audience that their business faces or touches is far too small to provide sufficient scale for a genuine network effect. It is necessary in almost all cases that the token appears likely to rapidly expand in use and become a broadly adopted solution.
It is key to create a token concept that delivers on this, and that the potential can easily be seen in the whitepaper. With these "small universe" companies I suggest that the CEO either create ways in which to make their token concept have a very broad use case and appeal, or that they make it into a genuine utility token instead of raising capital using it, or to not do an ICO.
Must attract the actual ICO investors
Most of the real crypto investors (about 90%) are young techies that made a fortune on Bitcoin, and they are looking for revolutionary blockchain opportunities - and are less concerned about pure financial returns or share/stock ownership. These people understand the technologies behind the projects and they only invest if they see the potential for scale and significant positive change - disruption to the old established players' matters a great deal to them.
Another important thing is that they are idealists, they truly believe in the concept of decentralization, and they are very critical of the current banking and monetary system. As an example, for a long time the general opinion of Ripple (XRP) was very bad because of its centralized nature and intention to cooperate with the old school banks. Innovative disruption that leverages the blockchain is a highly desirable characteristic.
In order to attract serious investors, the whitepaper has to be genuine and well written. Investors know the different tokens and projects and they can tell if a whitepaper is real or superficial.
The token must attract a large audience to use it or make money with it
Token enthusiasts have learned that they can make serious money on ICOs when they identify a truly strong blockchain model. And they are open to new concepts for extra income. Tokens that provide passive income are getting more common, although after the Bitconnect scam people are more careful and they think twice before they lock in their money.
Be in a field that is interesting and solves real problems which leverage the blockchain
Crypto investors are selective. Since there are many lightweight ICOs which do not really require a blockchain solution to deliver their functionality, they have learned how the pick out the diamonds in the rough. If a token gives a solution to a real problem, it is more likely that investors are going to support it, because there are many people who are looking for great opportunities to disrupt the status quo using blockchain technology.
The team must be superb
The team is obviously one of the most important factors in crypto because an investor looks at two main things before investing; The whitepaper and the team behind the project. Since most of the ICOs don't have much more than a concept, investors look for a credible team. If an ICO company can hire people that are well known and respected in the blockchain field or in the area of the ICO company's business, this will help build credibility. A good example is Cardano(ADA) who has been keeping its place in the top 10 cryptos for a long time, without a working product. It is only possible because their team is so good that everyone believes in them in the long term. Make sure that the team is easily explored to show evidence that they are real and accomplished. Don't just make the claim, show proof in a transparent manner
Have the founders and key executives vest their token ownership over three or four years. This ensures that they are likely to stay engaged as is necessary to deliver on the promise.
Provide voting authority to token owners to give them some say in how the business is managed and directed. Just don't take this too far!
For US-ICOs make sure to do QA testing of the smart contract and token software to ensure that they deliver on the SEC-required aftermarket trading restrictions that follow from the type of offering that is being made (Reg D, Reg S, Reg A+ or Reg CF (and later, IPO)). It's not sufficient to "try", it is necessary to deliver.
Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital marketplace for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves and eASIC.
Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.