How crypto-mutual fund Astronaut aims to minimize risk in ICO investing

Photo credit: Astronaut.

In 2017 alone, nearly US$2 billion has been raised through initial coin offerings (ICOs), outpacing venture capital seed investments. If you’re one of those who want to get in on the action but don’t know where to start, you’re not alone.

Distinguishing promising and trustworthy token sales from the ones that are out to steal your money is no easy task. Participating in desired ICOs and trading tokens on exchanges can also be tedious and difficult.

These are the problems Matthew Dibb and his team aim to solve through Astronaut Capital, a service that allows retail and institutional investors to participate in the growth of a variety of cryptocoins through a single token – the “Astro” token. That way, instead of investing in and conducting due diligence on each ICO separately, investors put their money in Astronaut, a kind of crypto-mutual fund.

Astronaut itself is currently holding an ICO. Its goal is to raise US$22 million, which it will use to invest in other ICOs. Whoever buys its token indirectly participates in these other ICOs and earns through:

• Quarterly ether income distributions, which grow as Astronaut cashes in on gains from the assets under its management
• Capital gains from trading the Astro token, whose value is aligned with the value of the fund

What will determine the success of its investment strategy is its wholly-owned cryptocurrency research arm in Singapore, Picolo Research.

Independent assessment

Picolo is a free service that assesses how risky an ICO is. For example, it gives a token sale five stars with a “buy” tag if it’s “a high conviction buying opportunity,” or two stars with a “risky” tag if it comes with a big risk of losing capital. Sometimes, they tag it outright as a “scam” that should be avoided at all costs. The tags and ratings are accompanied by commentaries detailing why the ICOs were rated as such and their strengths and weaknesses.

It has been operating for some time before the team stumbled upon the idea of an ICO investment fund.

Picolo, now with more than 10,000 subscribers, started out as a passion project. Last year, Dibb and some partners were trading cryptocurrencies for clients, some of whom asked for institutional-grade reports on ICOs to guide them on the best bets.

Coming from an investment background, he said they were used to that kind of work. Dibb is the director of Wise-owl, a research company for microcap stocks in Australia. These microcaps – with market valuations below US$10 million – are generally in their early stages and built on a concept you can barely verify due to scarce information in the marketplace. So making the transition to ICOs, which are very similar, was easy.

“We really enjoyed doing those ICO reports and we said this is something that the public market will probably want,” said Dibb. “We felt there was a need.”

With a couple of sample reports, Dibb and his partners launched a contact form on Product Hunt and Beta List, and 6,000 people signed up in a week.

Industry stakeholders we spoke with recognized the need for assessment tools in the rapidly growing ICO market.

Determining factors

Zooming in on security

A way to monetize

Filtering out dumb money