Darren Lau: How to choose VC for blockchain projects? This is a consideration framework for reference
1. Funds are abundant now. Everyone has money and they want to invest. The influx of funds into the crypto space will increase every week to satisfy this desire.
But what is a good fund?
How should cryptocurrency founders choose from the ever-growing list of funds and angel investors?
Let’s take a closer look?
2. This is the model framework that I thought of when evaluating venture capital funds (VC). Divided into five consideration factors:
- financial support
- Past investment records
- Distribution scale
3. 1. Add value-identify areas in which you need help in token economics
Can they help solve it? (For example , the cooperation between @Delphi_Digital and @ Axie Infinity)
Did they vote or make any governance suggestions? (For example, @anjan_vinod proposed to add @barn_bridge to @AaveAave)
Did they even comment on any project? Have you supported any projects?
Some anonymous individuals are more active than VCs in participating in governance forums. (E.g. @MonetSupply):
What is the scope of VC’s influence?
Are they connected to the agency? Market maker? Exchange?
marketing personnel? podcast? newsletter? youtube up master? Tiktok Internet celebrity?
(For example, @mrjasonchoi and @theBlockcrunch, and @spencernoon and @OurNetwork__)
6. Technical strength:
Do they have technicians who can help with code reviews? Can they run validator nodes?
Do they have a laboratory department-build products that support your project? (For example, @hiFramework and @Delphi_Digital)
Can they use @DuneAnalytics or @nansen_ai to make custom data dashboards?
7. Staff recruitment
Do they have a working committee? (E.g. @DeFianceCapital and @MechanismCap)
Do they have a full-time hiring manager (such as @dragonfly_cap) who can help you find suitable candidates for your project?
Take a look at their current investment target companies:
Will there be synergy? Will there be a conflict?
If so, since VC has already supported our competitors, why invest in us?
9. Compare them with other institutions/previous investors in the fundraising round:
Do they provide the same added value?
Treat them as part of the same team / hope they can complement each other. Some VCs believe that larger VCs will do all the work in a big way—and ultimately add less value.
10. 2. Capital support: guide liquidity to the agreement
Attract considerable inflow of funds with a long binding period to guide the platform!
Most retail liquidity is purely profit-seeking:
Projects like @goldfinch_fi have raised working capital. For example, a one-year deposit in exchange for a fixed share of tokens
11. Several Polkadot ( DOT ) and Kusama ( KSM ) projects also require VC to invest in their DOT/KSM to win the Parachain slot by bidding.
You want your VC to become the largest and most active user of your own agreement.
12.3. Past investment records
What industries does this VC usually invest in?
What expertise can they provide for your project?
Ask for the list of companies they invest in for your reference and inspection!
You can also go to @dovemetrics to get a publicly announced list of investment targets.
14. You want to find any minefields from past records:
- VC tried to change the terms
- Trying to eat more in the financing round
- Unfulfilled promise
- Hidden time bomb
Ask what other investors think in this round. Everyone in the field of encrypted VC knows each other.
15, 4. Distribution scale
What percentage of the network will you sell to the fund?
How do you adjust expectations?
Compared to their previous portfolio, is this a high percentage?
VC does not always provide the same level of support: -> $5 million positions are more popular than investments of $50,000.
16. Some VCs treat investments as call options.
Not particularly optimistic, but promised a small amount of investment as a “support check.” If it’s good for them, cash in the benefits, and publicize yourself as a torch. If the project is to fail, a small sum of money is invested.
17, 5. Manpower
First of all, who is managing the fund? What can you know about them?
Check out their Twitter accounts more and see what they post on Twitter. Listen to their podcasts, read their blogs, and understand why they do this.
The best investors in DeFi do this, not just for money!
18. When looking at the fund as a whole, please consider the size of their team.
As a founder, will your project be equipped with full-time personnel? Will you get the support of other members of the company?
It is worth considering the person’s expertise/focus in your project.
19. The corporate culture of VC is also very important.
How is the working experience at that VC? Investigate or ask if they spend more time looking for deals or support the companies they invest in.
If you can find former employees of VC, it is worth contacting them and asking for their original opinions.
20. Are you willing to get funding from the VC because of the analyst/partner you talked to, or do you want the entire team and brand?
If it is really because of the person who facilitated the transaction, please ask them to write an angel investor check.
In any case, the current incentive mechanism of most funds has been broken, and it may become a threat one day in the future.
21. Finally, think about what kind of people are they?
Because there is a problem in your agreement, will they be willing to answer the call at 3 in the morning?
If they came to your place, would you drink with them?
22. In the final analysis, through financing, you are selling your company’s equity, or you can say selling your children.
Do you really want someone to get something for nothing from your hard work?
Or do you want someone to fight alongside you in the trenches?
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/darren-lau-how-to-choose-vc-for-blockchain-projects-this-is-a-consideration-framework-for-reference/
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