Due Diligence for Initial Coin Offerings

The cryptocurrency market is booming with hundreds of Initial Coin Offerings (ICO) looking for financial support from investors.  Not all of these ICO will be successful and all such investments are considered to be high-risk with the potential for high return.  So, how do you evaluate which ICOs are legitimate and which will have the best chance of being successful?   Through due diligence of course!

Here are some things to look at prior to making an investment:

• Research and learn all you can about Initial Coin Offerings. An ICO is a crowdfunding event to raise money for a new cryptocurrency asset, company, or venture.  Unlike an Initial Public Offering (IPO), you don’t necessarily own shares of the company. Instead, you own tokens that can be traded on exchanges; the values of which will rise or fall depending on the success of the venture.  Currently, ICO are unregulated so they offer both greater risk and greater rewards for investor.
• Evaluate the ICO venture.
• Research the target market. Just like any other start-up, you want to understand who their target customer is, the size of the market and whether the market is likely to increase or decrease.
• Research the competition. Look at what solutions other companies are providing.
• Ask for a comprehensive business plan and financial plan. Understand how much the ICO is trying to raise and why.  Find out know they plan to spend the money raised and determine what their timeline is for product rollout?
• Since there are no legal reporting requirements for ICOs to accurately reports key information to investors, an analysis of peer reviewed comments and positing may prove invaluable.  This information must also be taken with a grain of salt however as peer reviews have been known to be swayed or bought.
• Evaluate the community support to determine if the ICO will be supported by reliable exchanges.
• Evaluate the funding and distribution of coins. How many coins will be created and distributed?  Not all ICOs are distributing all of the circulating supply of tokens.
• Evaluate the team behind the ICO. After all, you need a competent team to manage substantial funds.  A team with experience, integrity and an in-depth understanding of the community and the market is one of the most important criteria for success.

With a proper due diligence, investors can identify the pros and cons of each investment.  The ICO market is still in its infancy and will no doubt go through many ups and down.  Some ICOs may be more popular than other, trading up quickly.  But real questions must be asked to determine if there is something substantial behind the coin to support its continued growth and success.

Failure to screen candidates properly leads to expensive mistakes!

Savvy consumers don’t buy a car or a house without first taking a good look at what we are buying.  Likewise, employers shouldn’t be hiring employees or employing third parties (individuals or companies) without first understanding who they are and what their background is.

We offer a number of screening services as well as background and due diligence programs that will help you reduce your risk and improve your decision making process by providing you with the most accurate, up-to-date information possible.

When to call an investigative specialist for your next due diligence investigation?

There is certainly no shortage of service providers that claim to provide professional due diligence services.  It’s a fairly new trend that has been picking up steam and public record companies, investigative database companies, online information brokers and investigation companies are jumping on the band wagon, head first.

But before you select a service provider, there are a few things you should consider.

Public record companies are not licensed investigation agencies nor do they employ investigators or researchers.  They can conduct a group of searches that they will call a ‘due diligence investigation’ quickly and cheaply however they will require that you provide all of the party information (legal names, dates of birth, addresses etc) needed for the searches to be conducted.   Then they conduct the searches and provide the results.  Which is great if you know exactly what you want and you have all of the correct information to start with.

Since public record companies are not licensed agencies, they can’t use any investigative skills, tools or resources while conducting a due diligence investigation.  They just conduct the searches that were requested using the information provided.  So if you requested several ‘due diligence’ searches to be conducted on a company called ABC Management Inc and the actual legal name of the company was  ABC Management Group Inc, most if not all of your searches would come back with inaccurate results.  Likewise, if you thought ABC Management Group Inc was located in Toronto but it was actually located in York Region, your searches would come back with inaccurate results.  The worst thing is, you may not even know that you have inaccurate results and using this information to make key decisions might lead to significant risk. 

Companies that sell information through investigative databases as well as online information brokers also claim to meet all of your due diligence needs.  And they do a great job of providing large amounts of data for one great price.  The only problem is that they are first and foremost data aggregators.  Not only is their data notorious for being flawed, no one company has complete coverage of all information resources.  So knowing which database to use, when to use it and how to use it becomes key.  These resources are generally used by skilled investigators that can search the appropriate resources, compile the data, analyse the data and then verify the data through other sources.  So although these investigative databases and online information brokers market directly to the end consumer, the data they provide is only a small part of what is required to conduct an actual due diligence investigation.  Don’t be fooled into thinking you have all the information because you obtained an investigative report on a subject.  Relying on such a report to make key decisions might lead to significant risk.    

When our company first opened for business, we choose to specialize in due diligence and business background investigations.  Over the past 15 years, our skills have improved, our resources have grown and our products and services are much more comprehensive. In fact, most of our clients were other investigators who needed our specialized services.

Over the past few years however, private investigators have become more computer savvy and have started offering their own due diligence services.  Granted, there are some investigation companies that have done a great job at creating specialized due diligence departments in-house while other companies have gone on to specialize in pre-employment screening and background checks.  But there are many more investigation companies that consider due diligence nothing more than doing a few public record searches.  And few companies are actually able to go beyond the basics.

It takes a keen understanding of what due diligence is required to achieve the client’s goals, specialized knowledge, an analytical approach, an investigators eye and most of all, access to the right resources to conduct a well designed, comprehensive due diligence investigation.  

That’s why we employ only individuals with a business or research background who are ALSO Certified Professional Investigators, Certified Fraud Examiners and open source intelligence specialists.

It’s also why we constantly upgrade our skills, maintain subscriptions to several hundred professional databases worldwide, have access to hundreds of thousands online and on-the-ground resources, incorporate cutting edge technology into our investigations and reporting formats and maintain a large network of investigative professionals worldwide.

Our personal, hands on approach to due diligence and business background investigations means that each investigation is conducted by a team of investigative professionals and coordinated by company’s owner and operations manager.

Our goal is to provide our clients with the due diligence they need to make informed decisions.  We also consider it our responsibility to help educate people on the benefits of effective due diligence.  So if you have any questions, please don’t hesitate to contact us.