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Crypto & NFT projects are essentially startups.
Learning to evaluate a startup like a VC gives you an unfair advantage in crypto
Here are the lessons to learn from how VCs evaluate startups & projects.
A thread
Learning to evaluate a startup like a VC gives you an unfair advantage in crypto
Here are the lessons to learn from how VCs evaluate startups & projects.
A thread
Want an unfair advantage? Learn to evaluate like a VC in 5 min.
Investors look for a couple of key things:
1. Problem & Need
2. Product & value proposition (Utility)
3. Team
4. Market
5. Differentiation & Competition
6. Go to Market
7. Traction
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Investors look for a couple of key things:
1. Problem & Need
2. Product & value proposition (Utility)
3. Team
4. Market
5. Differentiation & Competition
6. Go to Market
7. Traction
2/
#1 Problem & Need.
Projects need to solve a need or a problem.
Investors want to know if the problem NEEDS to be solved or if it would be nice to solve.
More pressing the problem, the more successful the startup
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Projects need to solve a need or a problem.
Investors want to know if the problem NEEDS to be solved or if it would be nice to solve.
More pressing the problem, the more successful the startup
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There was no censor resistant, transparent store of value that suited the needs of the digital age.
BTC created a decentralized, borderless store of value & solved that problem
ETH struggles to scale & has high gas costs. Alt chains like AVAX & Terra solved that problem.
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BTC created a decentralized, borderless store of value & solved that problem
ETH struggles to scale & has high gas costs. Alt chains like AVAX & Terra solved that problem.
4/
Crypto Lessons:
More pressing the problem, the more money you can make.
Pressing problems are more likely to be solved ASAP & will make the most money.
Identify problems - bad interfaces, high costs, poor experiences, long wait times - in your crypto journey.
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More pressing the problem, the more money you can make.
Pressing problems are more likely to be solved ASAP & will make the most money.
Identify problems - bad interfaces, high costs, poor experiences, long wait times - in your crypto journey.
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The more painful it is to deal with, the more closely you should look at that space.
Invest in protocols & projects that solve painful problems.
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Invest in protocols & projects that solve painful problems.
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#2 Product & Value Propsition (Utility).
Investors want to understand the solution the startup is building to solve the problem.
• What is the tech they’re using? Is it feasible
• Is it actually solving the problem?
• What is the value created for the users
• ROI
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Investors want to understand the solution the startup is building to solve the problem.
• What is the tech they’re using? Is it feasible
• Is it actually solving the problem?
• What is the value created for the users
• ROI
7/
Crypto Lessons:
Read the white papers (they’re not as scary as they seem).
As you read many you’ll be able to gauge the feasibility & understand the tech.
Or, read the breakdowns of them
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Read the white papers (they’re not as scary as they seem).
As you read many you’ll be able to gauge the feasibility & understand the tech.
Or, read the breakdowns of them
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Projects that provide real utility will be the only ones making it.
This is especially true for NFT projects.
• Mere pfp NFT projects are going to fail.
• Creating a token & staking it is not utility.
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This is especially true for NFT projects.
• Mere pfp NFT projects are going to fail.
• Creating a token & staking it is not utility.
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Winners:
• Solve a problem - “ making it easier for beginners to enter crypto” through GameFi is real value.
• Actually create & deliver
Long term, bet on projects that provide real value. That’s where the money is at
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• Solve a problem - “ making it easier for beginners to enter crypto” through GameFi is real value.
• Actually create & deliver
Long term, bet on projects that provide real value. That’s where the money is at
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#3 Team.
Teams make or break the team. More than anything, investors bet on the team.
A bad team with a good product will fail. A good team with a bad product can pivot & succeed.
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Teams make or break the team. More than anything, investors bet on the team.
A bad team with a good product will fail. A good team with a bad product can pivot & succeed.
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Investors look for:
• Past experience & track record
• Ability to produce results
• Clarity & good communication
• How compatible & complementary the team is
Crypto:
The team is just as important in crypto. If anything, more important.
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• Past experience & track record
• Ability to produce results
• Clarity & good communication
• How compatible & complementary the team is
Crypto:
The team is just as important in crypto. If anything, more important.
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Team lessons.
Doxxed teams are the easier to analyze. Look for the same things that the investors do (12/)
Undoxxed teams are harder.
• Look at what they have achieved up until then.
• Are they communicative?
• How do they answer tough questions ?
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Doxxed teams are the easier to analyze. Look for the same things that the investors do (12/)
Undoxxed teams are harder.
• Look at what they have achieved up until then.
• Are they communicative?
• How do they answer tough questions ?
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When you analyze a project, spend extra time looking at the team.
Here’s my in depth guide on evaluating teams in crypto.
https://twitter.com/Cov_duk/status/1511314611672211459
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Here’s my in depth guide on evaluating teams in crypto.
https://twitter.com/Cov_duk/status/1511314611672211459
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#4 Market.
Big markets = big money.
At the end of the day, more people = more money.
Often, Investors think of the best case scenario:
What if this startup does everything right & succeeds. In that case, bigger market = more $$
Also, a small but growing market is good
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Big markets = big money.
At the end of the day, more people = more money.
Often, Investors think of the best case scenario:
What if this startup does everything right & succeeds. In that case, bigger market = more $$
Also, a small but growing market is good
15/
Crypto:
Gauge the size & impact
You can use the market size to determine how long to hold.
If a project checks the other boxes, bigger the market, longer you hodl.
Look for small but growing spaces & what’s being built in these spaces?
Troves of alpha & plays.
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Gauge the size & impact
You can use the market size to determine how long to hold.
If a project checks the other boxes, bigger the market, longer you hodl.
Look for small but growing spaces & what’s being built in these spaces?
Troves of alpha & plays.
16/
#5 Competition
Investors need to understand the competition & how this startup is different
• Who are the competitors? How is this different
• Who failed in this space and why? What is this startup doing different
• What is the startup’s unique edge
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Investors need to understand the competition & how this startup is different
• Who are the competitors? How is this different
• Who failed in this space and why? What is this startup doing different
• What is the startup’s unique edge
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Crypto is full of copied projects.
The copies almost always fail. Don’t get caught holding a falling knife.
Every NFT project is now making a metaverse. That is nothing special.
Building another metaverse does not mean success. Look for projects that offer unique value.
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The copies almost always fail. Don’t get caught holding a falling knife.
Every NFT project is now making a metaverse. That is nothing special.
Building another metaverse does not mean success. Look for projects that offer unique value.
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When you’re analysing a project:
Look at other projects doing similar things.
Is project doing the exact same thing?
Or does it provide some additional benefits ( lower costs, higher speeds, better experience) ?
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Look at other projects doing similar things.
Is project doing the exact same thing?
Or does it provide some additional benefits ( lower costs, higher speeds, better experience) ?
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If it’s the exact same thing, why risk everything & invest in a newer protocol?
Look at failures in the space. Why did they fail? What is this project doing better?
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Look at failures in the space. Why did they fail? What is this project doing better?
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#6 Go to Market.
Investors want to understand how startup is going to be launched & how they will acquire users.
Essentially, how they will market & grow themselves.
Crypto:
Essentially this is community & marketing. Super important in crypto.
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Investors want to understand how startup is going to be launched & how they will acquire users.
Essentially, how they will market & grow themselves.
Crypto:
Essentially this is community & marketing. Super important in crypto.
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Understand how good their community is:
• Is there real engagement & genuine interest? Or are they just shilling &
• Is there thoughtful discussion & questioning?
• Does the team take in community feedback?
• How does the community react to obstacles?
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• Is there real engagement & genuine interest? Or are they just shilling &
• Is there thoughtful discussion & questioning?
• Does the team take in community feedback?
• How does the community react to obstacles?
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You can make money off of blind hype & cults. But these are short term plays.
Use tools like @LunarCrush to gauge the social sentiment for each coin.
Look at what the top influencers for each coin are saying. Is it valuable? Or are they just shilling their bags?
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Use tools like @LunarCrush to gauge the social sentiment for each coin.
Look at what the top influencers for each coin are saying. Is it valuable? Or are they just shilling their bags?
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Is their marketing working?
Look at Twitter & Discord. Look at the engagement on each post. Is it growing?
Are they partnering up with the right people?
How good are their community building efforts?
Lot’s of money can be made selling the hype.
https://twitter.com/Cov_duk/status/1510098538432135169
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Look at Twitter & Discord. Look at the engagement on each post. Is it growing?
Are they partnering up with the right people?
How good are their community building efforts?
Lot’s of money can be made selling the hype.
https://twitter.com/Cov_duk/status/1510098538432135169
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#7 Traction (Results).
Investors want to see proof in the form of results.
• How many users are using this? What are they saying?
• How many partnerships has the team formed?
• What results do they have to back their claims?
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Investors want to see proof in the form of results.
• How many users are using this? What are they saying?
• How many partnerships has the team formed?
• What results do they have to back their claims?
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Crypto:
Currently, a lot of crypto is in earn money then build mentality. This is not sustainable.
Pixelmon made $70M before they had anything.
This promotes scams & shitty projects.
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Currently, a lot of crypto is in earn money then build mentality. This is not sustainable.
Pixelmon made $70M before they had anything.
This promotes scams & shitty projects.
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Invest in results. Look at:
• The team’s track record.
• Number of Users
• Total Value Locked (TVL)
• Milestones hit
• Partnerships & Investors they’ve brought on
This is especially important for undoxxed founders.
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• The team’s track record.
• Number of Users
• Total Value Locked (TVL)
• Milestones hit
• Partnerships & Investors they’ve brought on
This is especially important for undoxxed founders.
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With that, you now know how to evaluate a startup & crypto project.
Crypto is full of amazing projects & startups that are primed to explode.
The next thing you a project, make sure to look into these 7 things.
You'll become a 10x better investor.
Crypto is full of amazing projects & startups that are primed to explode.
The next thing you a project, make sure to look into these 7 things.
You'll become a 10x better investor.
I hope this was insightful.
• Please retweet this thread
• Follow me @Cov_duk for more alpha & actionable insights.
• Follow my medium https://covduk.medium.com/ for exclusive content
• Please retweet this thread
• Follow me @Cov_duk for more alpha & actionable insights.
• Follow my medium https://covduk.medium.com/ for exclusive content
If you found this useful please retweet this thread 
https://twitter.com/Cov_duk/status/1518561741382176769
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Here were your crypto lessons from how VCs evaluate startups.
Want more crypto lessons from other spaces? Check out @thedefiedge's thread on poker lessons: https://twitter.com/thedefiedge/status/1494718736175009794
Want more crypto lessons from other spaces? Check out @thedefiedge's thread on poker lessons: https://twitter.com/thedefiedge/status/1494718736175009794
