The cryptocurrency presale market has exploded with thousands of new projects offering discounted token sales. This presents a dilemma for investors on how to evaluate deal quality amidst heightened speculation and noise. The approach is to follow the activity of venture capital funds. By tracing VC involvement back to first principles, retail participants can leverage institutional interest as a heuristic to help identify promising network launches.

Logic behind VC investment activity

Venture capitalists are professional asset allocators seeking maximum returns for their limited partners. This mandates disciplined filtering and due diligence around deal flow. Promising ventures must demonstrate product-market fit, favorable growth outlooks, and asymmetric risk-reward ratios to warrant inclusion in selective portfolios. Funds also scout for exceptional teams, with holdings often averaging 8+ years of domain expertise. The emphasis on underlying business viability contrasts sharply with retail speculation around crypto assets. But, makes VC interest a good barometer of substance.

Network value accrual in presales

What is the presale stage? The presale stage, often referred to as the pre-sale stage, is a phase in various industries, particularly in finance and technology. Cryptonetworks blending open-source software with coordination tokens allows global participation in protocol governance and value creation. By backing presales, VCs gain early exposure to network ownership, while providing guidance and credibility during critical formative stages. If the network product resonates and achieves product-market fit, utilization and governance activity should drive price discovery around the coordination tokens.

Early involvement allows funds to benefit from the exponential accrual phase as adoption picks up momentum. Pythonic network effects make this a very lucrative stage for gaining infrastructural exposure. VC allocations into private sales offer mirrors to the technologists and visionaries constructing what they believe to be the picks-and-shovels data protocols, DeFi primitive money lego stacks, and creator economy platforms underpinning the algorithms, communities, and economies of Web3.

Evaluating projects

So, how can everyday investors evaluate VC signals? Infrastructure now tracks fund involvement across blockchain projects, collating data on participation, investment sizes, and timing. Analyzing trends can reveal promising network blueprints. Tracing technological lineages gives insight into builder pedigrees and community support. Studying project categories shows sector interest and emerging niches like social tokens. Reviewing investor profiles provides perspective on backer theses and credentials. Comparing ticket sizes indicates the degree of conviction between seed capital and concentrated pre-launch positions. Combining quantitative funding data with qualitative inputs from technologists, users, and VCs provides powerful lenses for dealing with quality at the earliest stages.

Sector analysis

  • DeFi – Billion-dollar funds allocations into sophisticated stablecoin protocol Curve raise signals confidence in technical architecture and go-to-market strategy.
  • Gaming – Top firms buying into pre-sales of guild-owned NFT gaming studio Games shows VCs consider the next Big Thing business model a key Web3 trend.
  • Social tokens – Coinbase Ventures, SV Angel, and Samsung Next supporting $10M+ raise of creator economy platform Roll’s social token presale indicates broad belief in new monetization primitives for passion economy distributions.

These data points demonstrate some of the tells available for filtering the noise to uncover activity mirrors capturing VC conviction around cornerstone ecosystem advancements.

Steve Gordon

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