Investing In Founders & ethLondon

The Blockchain Sector @ 2023-10-26

James Bachini

Oct 26

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VCs frequently restate that ideas are worth nothing and their investments are influenced by the team seeking funds. A team boasting impressive credentials in their relevant industry and iron clad determination has a greater likelihood of success in raising funds.

Decentralized finance operates differently. Teams developing protocols and projects often work anonymously, making it tough to gauge their experience or competence when partaking in public sales or secondary markets.

Despite the anonymity, we can glean some insights into team operations by looking at contributions on GitHub. We can identify who has contributed to a project, the number of developers, and even assess the quality of the code they've generated. I discussed this recently here: How I Track Developer Activity For Crypto Projects

Find this screen at Github > repo > insights > contributors

A bigger challenge lies in analyzing a team's operational capabilities. Managing a startup of any kind, including crypto projects, requires more than just developers. There’s marketing, business development, legal, hiring, operations.

While there is no straightforward metric to quantify this, partnerships is one area that can provide some insights. Many crypto projects establish partnership agreements for publicity, these add little value long-term and can become a distraction. An ideal partnership adds significant value, such as integrations between DeFi protocols.

An instance of this is when Lido's stETH started being integrated throughout the DeFi ecosystem, resulting in a moat for their product. The team also launched wstETH token to make the product easier for 3rd parties to build on and integrate.

A project's ability to forge partnerships with leading DeFi protocols is highly beneficial. Valuable partnerships can serve as noteworthy signals amidst the noise of social media announcements.

For me I still feel like I’m missing something in terms of my analysis. If it’s so important to professional early stage investors it should be something that I focus more on and try to evaluate better.