CryptoTalk - Evaluating Sentinel Chain ICO, a case study

Hello Steemians! Not too long ago, I explained what is an ICO and whether it is worth investing in it. In the same article, I talked about criteria that you should look for when evaluating an ICO before you invest in one. I realized what I lacked in that post is how these criteria can be applied on a real-world ICO. Today I will like to continue from where I left off and evaluate an actual ICO, Sentinel Chain.

As a recap, here are my evaluation criteria from my previous post:

• Product/Business case
  • Do the project team already have a prototype or a MVP (minimum viable product)?
  • Is the project satisfying a need or solving a real problem?
  • What is on their roadmap? Is their roadmap reasonable and manageable (not too ambitious)?
• Team
  • Who are in the team and do they have the aptitude and attitude to develop a successful product?
  • Who are advising them and do they have any strong backing from big investors?
• Valuation (This is something new which I will evaluate in detail in the following sections)

The are many ICOs in the market right now and it is almost impossible to go through all of them in detail. Evaluating based on the above criteria is a quick way for me to filter from hundreds of ICOs to a few good potentials that I will research further on. If an ICO does not even meet most of the above criteria, we should not waste any more time on researching about it. So, using Sentinel Chain as an example, let me walk you through my thought process.

Product/Business case

What is Sentinel Chain all about? The team describe it as such,

The Sentinel Chain is a B2B marketplace specifically designed to provide affordable and secure financial services to the unbanked.

Essentially, Sentinel Chain is targeting livestock farmers. By allowing the farmers to use their livestock as collateral, Sentinel Chain is providing them with a full suite of financial services. From insurance, to loans and savings. Looking through its site and the video below. You will have a better understanding of their business proposition.

My thoughts:
✔ It is a unique business proposition which I have never seen in the market.
✔ If successful, it is indeed able to solve a real world problem. Presently, a lot of farmers in developing countries are being taken advantage of as they do not understand how they can leverage on various financial services to safeguard themselves and grow their business. By offering them a chance to use their livestock as collateral, it will unlock tremendous potential for them.
✖ On the other hand, this project might be a little too idealistic. There might be a huge learning curve for farmers who are not financially savvy in the first place to adopt this technology.
✖ In addition, they do not have a MVP (minimum viable product) yet. And that is something of some concern.

Team

The core team comprises of mostly Singaporeans with background in the technology and financial services sectors. Based on the profile of the team, I believe they are capable of developing a reasonably good fintech system. However, the core business idea is to help the farmers, or the unbanked, to gain access to financial services. Based on the team's background, I think they may lack the necessary understanding of livestock farming in order for them to penetrate the market effectively to gain the critical mass.

However, they have a rather stellar team of partners and advisors. The advisors team is very experienced, with David Lee, a SUSS professor and Bo Shen from Fenbushi Capital. They also gotten investments from Fenbushi Capital and iGlobe Partners. In addition, they are also have partnerships with the likes of MayBank and VeChain. These are all positive signs.

There is one important incident which I will like to share and commend on the team. During the early stage of the KYC registration, a vulnerability was discovered on the server, which could potentially expose users' submitted documents. The Sentinel Chain team was quick to react and promptly brought down the server for investigation. The open letter from the CEO on the incident can be found here.

My thoughts:
✔ It is a positive sign that they have a decent team with good advisors and partners.
✔ As a security professional, I think the team could have done proper testing on their KYC platform before starting it. However, I have to commend the team's professionalism and transparency in handling the incident. Their prompt action also prevented more data from being leaked and eventually fall into the hands of people with malicious intent.
✖ However, the team is lacking in real world experience in livestock farming. Which is the foundation of their business plan.

Valuation

The token/coin initial valuation is something which I did not cover in my previous post. I added it because I think it is something which can be a potential deal breaker. It is important to know how much the team is valuating their token/coin. In this case, the Sentinel Chain is trying to raise a hard cap of $14.4 million USD for 40% of the total number of tokens. This translates to a total valuation of $36 million USD. OmiseGo is another project which aims to bring financial services to the unbanked. The key difference is that OmiseGo has a much broader scope and target audience. However, OmiseGo is currently having $1.8 billion market cap which dwarfs the valuation which Sentinel Chain is targeting.

My thoughts:
✔ I think it is a good thing that the team did not over estimate their worth. In fact, comparing to many other ICOs, the team is raising a relatively small amount of money. This is certainly a positive.

Conclusions

Overall, I think the Sentinel Chain is a project with good potential and low initial valuation. Key risk remains on the fact that they have yet to produce a MVP and the team's seemingly lack of understanding on the livestock farming industry. Again this is not meant to be a financial advice. The main objective is to walk you through how I perform a basic evaluation of an ICO. The above quick evaluation can be done in under 30 minutes in my mind. If it passes most of the criteria, I will then study the whitepaper. The devil is usually in the details and more in depth reading of the whitepaper is usually required to make the final investment decision.

Let me know if you enjoyed this coverage. I will post more on my ICOs evaluations if you guys are interested. Thanks and I hope I have shared something useful to you :)