The investment appraisals developed by ICORating are designed to help potential investors decide whether to buy the cryptographic tokens of startups during their ICO.
These ratings are intended to contribute to the development and functioning of the ICO market; they reflect an independent opinion on a project’s investment potential, an opinion formed using an extensive database and consistent, accurate terminology. This allows investors to make as informed a decision as possible.
ICOrating provides independent investment ratings and analytical materials that are created taking into account the specific requirements of particular projects within a global setting.
From time to time we update and improve the methodology used in the rating process for it to remain in step with current market changes. This allows us to draw ever-more meaningful and insightful conclusions and help market participants make well-informed decisions.
The agency currently uses the following indexes and rates:
This index is currently being tested, so there may be changes and supplements announced separately at a later date.
Risk score is intended to evaluate the risk of potential fraud, as well as a project’s overall quality. A high score indicates that there is little available information about the product, team and project documentation, which suggests the project is less likely to succeed.
Project evaluation is based on elements such as:
• The team
• White Paper
The purpose of Risk score is to give an investor a first impression of the project and evaluate the honesty of the intentions of the project’s founders. If all the project’s elements have been thoroughly and scrupulously worked through, there is less chance that the project will turn out to be a scam.
The score has 5 levels: very low, low, medium, high, and very high. The lower it is, the lower the risk of fraud is and the higher the project’s quality is.
The secondary purpose of the index is to evaluate the quality of the project and thus make the chances of successful ICO and future growth clear.
This index is currently being tested, so there may be changes and supplements which will be announced separately.
Hype score indicates the level of interest from potential investors. The higher it is, the more people are willing to invest in the project.
The score is calculated based on:
• The number of users on the project’s main social media channels
• The number of media mentions
• The number of mentions in mainstream technology and financial publications
• The number of search engine results
• The number of visitors to project website
The social channels analyzed include Slack, Bitcointalk, Telegram, Twitter, YouTube, and Medium.
As for mainstream technology and financial publications, we focus on such resources as Techcrunch, VentureBeat, Forbes, WSJ, Reuters, etc. Mentions in non-specialist mass media help to gain traction, broaden the audience and lead to new investors. Mentions in well-known IT and financial media lower the risk of fraud in the project.
This rating has 5 levels: very low, low, medium, high, and very high. The higher the score, the more people are interested in the project, indicating potential demand for the startup’s tokens.
This index is currently being tested, so there may be changes and supplements to be announced separately.
Invest-score is used for the long-term investment appraisal of the project including the description of its strengths and weaknesses. The report contains ICORating independent expert opinion on whether to invest in the startup.
ICORating experts perform a basic analysis of the following:
• Viability of the business model
• Comprehensiveness of the financial plan
• Competitive position
• Market dynamics
• Examination of the team
• Inner economics of a project: Financial model, etc.
Based on the analysis, the rating agency’s analytics draw a set of recommendations about a project’s long-term attractiveness for investors.
This overview gives a picture of the field in which the project is set, the direction of its further development, details of the product or service, the team’s competence, with the aim of completing the image of a project’s potential for the investor.
A rating scale is the basis for the relative assessment of an investment’s attractiveness, with those who issue a start-up’s crypto-shares then judged based on that attractiveness.
Ratings are prognostic by nature
As a part of its investment analysis, a rating agency examines information that is currently available, as well as evaluates the potential impact of anticipated future events. For example, when determining the rating of a startup, a rating agency can take into account the development dynamics of the sector in which the project intends to implement itself. It should be noted that rating agencies’ projects can be useful to investors and other market participants deciding on long-term and short-term investments alongside other business decisions. However, investment ratings are not a guarantee that the investments will pay off.
Ratings are the reflection of ICOrating’s views about the investment attractiveness of the issuers (blockchain start-ups). The basic characteristics are:
|Investment level:||startups with ratings from this category (Stable, Stable +, Positive, Positive +) have reasonable potential for growth and development, both in the medium and long term. They are attractive for investment||Speculative level:||this category is marked by a high degree of uncertainty in relation to the project’s development dynamics in the medium and long term, due to either individual features of the startups, or, characteristics of the industry (-ies) in which the project is operating.|
|Non-investment level:||projects in this category are characterized by a large number of "red flags" that may affect not only the dynamics of the project, but also its very functioning.|
|Default level:||this category is typical for startups whose projects are not only experiencing a strong downward pressure from market forces or individual structural problems that lead to rapid outflow of users, but a large number of critical problems with their business model or technical base.|
Note: Investment ratings are not an absolute guarantee that the project’s potential will be developed.
As future events and trends are not always predictable, assigning investment ratings can not called an exact science. This is why the opinions of ICOrating’s experts, which underpin the assigned ratings, should not be considered an investment guarantee of quality or a precise deﬁnition of a project’s potential to fail.
JUST AN OPINION
The investment ratings of ICOrating are based on analysis that is conducted by experienced professionals. They evaluate and interpret information received from token issuers and from other available sources, enabling ICOrating to make an informed opinion.
Contrary to the views of a doctor or lawyer, the analysts’ opinions, upon which the investment ratings are based, are not a recommendation or forecast. The main purpose of these ratings is to inform investors and other market participants about the relative level of investment risk which projects that issue cryptographic tokens are exposed.
While determining an opinion on investment risk, we rely on expert conclusions and analytical models. Analysts receive their information from public sources, published reports, as well as when talking with a project’s management team.
To determine the investment rating of a project, ICOrating assesses its ability and willingness to fulﬁll its commitment to the development and promotion of their product. In addition, speciﬁc risk factors that startups are subject to, because of the nature of its activities, are also analyzed: the practice of management, the level of developers skills, quality and structure of the code or prototype, marketing, media and more.
At the same time, there is a big focus on the project’s business model, the professionalism of the development team, the quality of the technical side’s development and the potential audience demand of the product in the medium to long term.
Factors ICOrating considers when determining a startup’s ratings:
Factors that deﬁne the project ratings can be both generic and more speciﬁc, those which are speciﬁc to a particular industry or project. While some risk factors are common to all projects (a growing number of competitors, reduced quality of technical resources), others may only affect a small, niche group of startups.
If ICOrating has information that it believes merits the need to change the rating, it may increase or decrease the project rating.
Modiﬁcation, reverse engineering, reproduction or distribution of content (including ratings, investment analysis results and data assessment, models) completely or partially, in whatever form or by whatever means, and storage of data in databases and search engines, without the prior permission of ICOrating or an active link to the source is prohibited.