What kinds of questions and research should I be doing to determine whether to invest in an IPO?
The ability to do an IPO through Counterparty is really exciting, and I’m looking forward to investing. But I am not at all an experienced investor, and I won’t just throw my money at something that looks like a good idea. So I am asking the experienced investors out there: what sorts of issues should I bear in mind as I research the IPOs on here?
Some issues come to mind for a start.
[list]
[li][font=verdana]I need to look at the company’s prospectus and consider whether they seem to have an understanding of the market they are entering;[/font][/li]
[li][font=verdana]How their product or service solves an existing problem and why people will want to buy/use it, etc.[/font][/li]
[li][font=verdana]I will want to see that they have a plan for development, and can explain how the money they are raising will be used.[/font][/li]
[li][font=verdana]I need to see how my investment will make money for me. [/font][/li]
[li][font=verdana]And I also need to have confidence in the people behind the offer. But how do I know that they are who they say they are? The trust issue is a big one anytime we’re dealing with an online entity.[/font][/li]
[/list]
Let’s take DUNNECAP as an example. I have read their prospectus and it seems like an interesting idea. I followed their links and read their updates, saw the other members of the company, etc. So the biggest and first question I have is: How do I know that this “storefront” is connected to real people with a real company?
What other questions should I be asking before I make an investment?
history has it, only 0.1% of all IPOs in cryptoworld are able to make ROI in BTC term.
asicminer, satoshidice are the only outliners I know.
Businesses making money in crypto are exchanges, gambling sites, asic chip makers, altcoining, and of course scamming.
So the most important question is what make such IPO be more profitable than hodling on to BTC (which grows 10x every year btw) ?
[quote author=sparta_cuss link=topic=310.msg2191#msg2191 date=1399131029]
What kinds of questions and research should I be doing to determine whether to invest in an IPO?
The ability to do an IPO through Counterparty is really exciting, and I’m looking forward to investing. But I am not at all an experienced investor, and I won’t just throw my money at something that looks like a good idea. So I am asking the experienced investors out there: what sorts of issues should I bear in mind as I research the IPOs on here?
Some issues come to mind for a start.
[list]
[li][font=verdana]I need to look at the company’s prospectus and consider whether they seem to have an understanding of the market they are entering;[/font][/li]
[li][font=verdana]How their product or service solves an existing problem and why people will want to buy/use it, etc.[/font][/li]
[li][font=verdana]I will want to see that they have a plan for development, and can explain how the money they are raising will be used.[/font][/li]
[li][font=verdana]I need to see how my investment will make money for me. [/font][/li]
[li][font=verdana]And I also need to have confidence in the people behind the offer. But how do I know that they are who they say they are? The trust issue is a big one anytime we’re dealing with an online entity.[/font][/li]
[/list]Let’s take DUNNECAP as an example. I have read their prospectus and it seems like an interesting idea. I followed their links and read their updates, saw the other members of the company, etc. So the biggest and first question I have is: How do I know that this “storefront” is connected to real people with a real company?
What other questions should I be asking before I make an investment?
[/quote]
Hi Sparta_Cuss,
I see you reference myself in here.
To verify me we can do one of three things.
I can send you and/or a trusted member of the community a scan of my passport. This would be watermarked for obvious reasons.
You can meet me in person - Plymouth UK, or anywhere in Devon really.
We can go on webcam.
Also RomeRun, we are an exchange, and a casino also so we should make ROI on both counts.
If you are to buy shares, tonight is the best night. Tomorrow morning the IPO price triples as we have already purchased all of the hardware required, now we are raising for modifications to the software.
We have been very transparent with the updates posted on our blog.
https://mimex.co.uk/wp/
Thanks for the reply to this set of questions, mrwdunne.
Hey, Niki Wiles, this is a conversation you might want to join. We might want to develop a protocol for such IPO verification. This is just the beginning.
[quote author=sparta_cuss link=topic=310.msg2202#msg2202 date=1399160258]
Thanks for the reply to this set of questions, mrwdunne.
Hey, Niki Wiles, this is a conversation you might want to join. We might want to develop a protocol for such IPO verification. This is just the beginning.
[/quote]
I don’t see how it could be integrated into the protocol. It should just be left for investors to do their own due diligence.
[quote author=sparta_cuss link=topic=310.msg2204#msg2204 date=1399160765]
[quote author=mrwdunne link=topic=310.msg2203#msg2203 date=1399160504]
[quote author=sparta_cuss link=topic=310.msg2202#msg2202 date=1399160258]
Thanks for the reply to this set of questions, mrwdunne.
Hey, Niki Wiles, this is a conversation you might want to join. We might want to develop a protocol for such IPO verification. This is just the beginning.
[/quote]
I don’t see how it could be integrated into the protocol. It should just be left for investors to do their own due diligence.
[/quote]
[font=verdana]I didn’t mean into the Counterparty protocol. I meant protocol more generally. Niki is looking at developing a Distributed Exchange Ratings Company that would interface with Counterparty. See here for more: [/font][font=verdana]https://forums.counterparty.co/index.php/topic,220.0.html[/font]
[/quote]
Just read it, we are definitely up for that!
I could (ultimately) look at doing something like this in DEXR.
Sparta_cuss and I have already looked at the idea of verifiable claims, where a participant can make simple statements, e.g. -
[list]
[li]“I hold a UK passport”.[/li]
[li]“I currently live in Amsterdam”.[/li]
[li]“I employ two developers.”[/li]
[li]“I have a working alpha prototype of our product, on our local web servers”[/li]
[/list]… and then different users could verify these claims in different ways, and you can look at -
[list]
[li][font=verdana]How trusted the person doing the verification is.[/font][/li]
[li][font=verdana]The method of verification (via email, skype, in person). [/font][/li]
[li][font=verdana]… and any residual evidence (photos, video). [/font][/li]
[/list]For example (just for fun) if Mrwdunne meets me in London, and brings his passport, which I verify, this would add a certain amount of weight to the idea that Mrwdunne is a UK citizen, depending on how much you trust me. Evidence mounts up as more claims are verified.
In addition to this, there’s the (sometimes implicit) more difficult to verify claims that anyone who’s running an IPO is probably making -
[list]
[li]“I’m honest and trustworthy”.[/li]
[li]“My business plan will make a ROI of X in time Y”.[/li]
[li]“I have the right business skills and team to make this work”.[/li]
[/list]For statements to do with trustworthiness, a person can lean on their own reputation, and / or they can get verifiable references from others.
For the last two points, aside from looking at an IPO prospectus, what can we do? I wonder if a good way to get a better handle on these questions is to invite public questioning from other entrepreneurs and investors.
Here’s a fun thought -
What about having regular events (a little like Dragons Den / Shark Tank) that we’d encourage businesses offering IPOs to participate in.
These could be conducted through Google Hangouts, and anyone interested in investing could participate, and could get their most pressing questions answered. Then the recording could be posted on the appropriate IPO page, in the forums.
I would see these events as being non-adversarial, they could be done in the spirit of helping the person running the IPO to refine their plan, and to provide assurances for investors. Maybe they could be more like an “Angels Den”.
Personally, I think we should encourage the idea that IPOs are more likely to be successful when they’re done in the spirit of a collaborative process with the Counterparty community. I like the idea that, as a community, we can help each other to get our business plans right, gradually establish trust with one another, and then when the time is right, invest in each others projects.
You have some excellent ideas there, I particularly like the Dragons den one.