ICO Analysis: Hyperion
Although the ICO space is still home to lots of exciting opportunities, investors who are serious about the way they invest face more challenges than ever. There is a flood of low-quality ICOs coming out, and picking the right one requires a lot of time and hard work researching them all in detail.
Because of this, many crypto investors have chosen to stick with only the best-known names in the industry. In other words, they invest only in the top coins by market cap, and avoid smaller coins and ICOs altogether. However, this also means they will miss out on the huge potential opportunities that do exist in the ICO space.
This is the exact problems that actively managed ICO funds aims to solve. Following the successful launch of the Crypto20 index fund that automatically tracks a weighted index of the top 20 cryptocurrencies by market cap, the same team (Invictus Capital) is now working on an actively managed fund called Hyperion.
The Invictus Hyperion Fund considers itself a venture capital fund, with the main selling points being that it allows individual crypto investors access to the earliest stages of new ICOs with the steep discounts that come with it.
Next, the fund claims to take all the hard work out of ICO investing by being actively managed by experts who do all the research for you. One thing to note is that the fund has no annual management fees, but instead charges investors a quarterly 12.5% performance fee. No management fee is highly unusual in the world of actively managed funds in traditional finance, but it surely aligns the fund manager’s incentives with the investors.
The idea of an actively managed ICO fund sounds intriguing for anyone interested in reaping the benefits of the ICO market, while avoiding the overwhelming number of low-quality ICOs and outright scams that are being pushed to the market.
The success of a fund of this type, however, depends largely on the ability of the team and the skills of the fund managers. Without a proven track record to review, all investors need to ask themselves if they trust the fund managers’ abilities to invest their money for them.
In the very well-written and detailed white paper, the team behind Hyperion explains how they plan to use a range of rather advanced trading strategies usually associated only with traditional finance to maximize returns and smooth out volatility.
These strategies include various forms of hedging and futures trading, including futures of assets such as Ethereum, as more digital assets become available on the futures market. These are all well-known strategies that hedge funds use, but it is important to keep in mind that the successful use of such strategies is highly dependent upon the skills and experience of the fund managers. Remember that although the word “hedge fund” sounds cool and is typically associated with wealthy investors, most of them deliver poor returns when compared to simple index funds.
The Invictus Hyperion Fund is a tokenized fund where investors hold the token, known as IHF, as proof of ownership in the underlying digital assets. IHF is an Ethereum-built ERC-20 utility token, with the initial value representing the holdings of the fund.
To be eligible for participation in the pre-ICO (starting April 30), you would need to be:
- An investor in the Crypto20 ICO, OR
- Prove that you own more than 500 Crypto20 tokens (an investment of about $520 at the time of writing)
The token price during this stage is set to $0.095.
Following the private pre-ICO, the public ICO commences on May 3 with an initial token price of $0.097. The price rises to $0.110 by the end of the public ICO.
New tokens will be minted as they are sold, meaning there will be no such thing as unsold tokens. Further, no additional IHF tokens will be issued after the conclusion of the ICO.
Fund investors will keep 98% of the funds raised during the token sale, while 2% is allocated to a once-off operating expense fee. After the ICO has been concluded, no more management fees will be charged other than the “success fee” mentioned above.
In terms of token distribution, 97.5% is reserved for ICO participants, 1.5% for the team, and 1% will be kept to cover marketing, security, and legal fees.
Once the ICO has ended and the token is listed on an exchange, its value will be determined by supply and demand for the tokenon the market. This means that the token price may trade above or below the value of the fund’s holdings, with the value of the underlying assets serving as a theoretical floor for the token price.
With Hyperion being a new fund, there is no track record for investors to review before investing. Fortunately, however, we know from the success of the Crypto20 fund that the team is able to carry out large ICOs and successfully manage a fund. Still, we don’t know much about their ability to actively evaluate ICO investment opportunities for clients, which is a risk that Hyperion investors will have to live with.
The CEO of the Hyperion fund is Daniel Schwartzkopff, while the Fund Manager is Bobby Jonker, an experienced South African financial services professional. Along with Mr. Jonker, the website also lists Dr. Brian Watson as Cryptocurrency Investment Analyst. All three also hold the same positions in the Crypto20 fund.
An obvious question when looking at the team is if one fund manager and one analyst will be enough to manage a crypto venture capital fund, with the very complex trading strategies laid out in the white paper along with the extensive research required to pick good ICOs to invest in.
The team appears to be nearly identical to the Crypto20 team, without taking into account the huge difference that exists between running an automated index fund and an actively managed venture capital fund.
Hyperion has an intriguing idea and a team with a demonstrated history of launching and operating a successful cryptocurrency investment fund. Evaluating ICOs for investment is simply becoming too challenging for most individual investors, so having a team of professionals to actively manage this portion of one’s portfolio makes a lot of sense.
Ironically, the main drawback here is also related to the huge amount of work required to effectively evaluate ICO investment opportunities. It is unclear whether the team is planning to bring onboard more analysts, but as of now, only the same analysts as those working for the crypto index fund Crypto20 are listed on the website. Time will tell if this is a strong enough team to successfully navigate the notoriously difficult ICO landscape.
- The team has demonstrated their capability of successfully running a cryptocurrency fund with Crypto20, but the risk here lies in whether the team will have the capacity to run two funds at the same time; one index fund and one actively managed venture capital crypto fund. -1
- Investors know nothing about the fund managers’ ability to find good investment opportunities. -1.5
- There is a strong need in the market for the service the fund offers; researching ICOs, separating the good from the bad, and investing client funds in only the top offerings. +3
- The fund offers legitimacy to projects that it chooses to invest in, professionalizing the entire ICO and blockchain start-up scene and potentially help separating scams from legitimate projects. +3
- The team appears strong with a demonstrated history of running other cryptocurrency funds. +2
- The team has developed several proprietary AI-based screening tools to help with the analysis process. +2
Overall, the Hyperion fund appears to be a solid ICO, solving a problem that all ICO investors are facing. It could help beginners avoid potential pitfalls in this space, while also being an advantage for more advanced traders and investors to use as part of their portfolio, possibly as a complement to holdings of more established crypto assets.
We believe the Hyperion fund deserves a strong score of 7.5 out of 10.
- Token Type: Utility
- Platform: Ethereum
- Symbol: IHF
- Pre-ICO: April 30, 2018
- Public ICO: May 3, 2018
- Token Supply: N/A (tokens issued as they are sold)
- Tokens Available for Sale: N/A
- Hard Cap: $15,000,000
- Price: 1 IHF = $0.095 – $0.110
- Payments Accepted: Bitcoin, Litecoin, Ether
- Jurisdictions Barred from Participating: USA, South Africa, Cayman Islands
Featured image from Pixabay.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term trading. The author has no investment in Hyperion at the time of writing.