How to Discover & Invest in Great Crypto Projects Early
Most investors today feel like those with a better network and years in the market have an unfair advantage. They seem to know about up-and-coming projects and get early access to their tokens through presales and other investment opportunities.
To be fair, you’re probably right about the “unfair advantage” part. That said, many of these investors want you to win as well. The web is full of information that can get you ahead if you only know where to look. And this is exactly why we wrote this article.
Over the next few chapters we will talk about a process you can follow to see where top-tier crypto investors place their money in real time. Through this process you will get more opportunities to get involved with these projects early on, and potentially benefit from a series of rewards.
The five-step process you will learn about involves the following steps:
- Creating a list of successful crypto VCs;
- Checking their latest investments and finding “winners” among them;
- Getting well-rounded information through the projects’ websites;
- Checking their social media channels for following and engagement;
- Getting heavily involved with your final list of “winners” to get rewards.
After reading this post, you will be able to see investment opportunities everywhere around you. You will also have a better idea on the things you can do to benefit from them.
Let’s dig in!
Step 1 – Familiarize yourself with investment firms and crypto VCs
To discover great crypto projects early on, you need to follow those who have access to such projects before they reach the market. In other words, the people and companies that are able to invest in presales. You’d be surprised by the amount of free “alpha” you can get simply by following these investors. One way to do this, which we discussed previously, is to follow these people directly on Twitter. The second way, which we discuss in this article, is explained below.
Check successfully launched projects and find repeating investor names
Visit the official websites of tokens recently listed on major exchanges (e.g. Binance, Coinbase, etc.) and scroll down to their “partners” or “early backers” section. Do this with enough coins and you will come across some crypto VCs that often repeat. These are the ones you want to keep in mind. To help you start your research, you might want to check Mina Protocol (backers) and Beta Finance (investors) first.
Create a spreadsheet and add all the names you see. In time, you will see certain names appear more often, and you will probably know them indirectly through their reputation. Some of the most popular (and successful) investment companies include:
- Alameda Research
- Binance Labs
- Coinbase Ventures
- DeFiance Capital
- Three Arrows Capital
- Delphi Ventures
- ParaFi Capital
- MultiCoin Capital
- And much more…
Watch UpOnly and Bankless on Youtube
UpOnly and Bankless are probably two of the very few Youtube channels that do not have affiliations with contrarian interests to your own. The podcast hosts interview interesting people in the crypto space among which founders of some of the most successful VC firms and hedge funds in the crypto space.
You might want to get into this step after creating the list explained in the previous step. This is where you will be able to get to know the teams behind the funds, get some information about their investment thesis, and their success over time. It is the final “sift” through which you will need to filter your list.
Step 2 – Visit Crunchbase to get an overview of investments
Ok, we should now have a list with at least 10 investment firms that have seen massive success in the crypto space and have an investment thesis that you tend to agree with. What you need to do now is check their latest investments before they are published on their official website.
To do this, we will use Crunchbase, a B2B database with a whole lot of information. We do not have any affiliation with Crunchbase, but we do recommend a premium account if you can afford it, in order to see much more information. That said, for this example we use the free version of the website.
Quick guide on getting insights through Crunchbase
In order to keep things as simple as possible, I started with Binance. Most projects listed on their trading platform usually see a massive growth multiple upon listing. If Binance invests in a project during this stage, it is very likely that the project will be listed on their platform at some point in the future.
Click on the first result that appears to see the company’s details. Note that the free version has a limited presentation of the company, but offers enough info for us to continue.
Now, click on the “Investments” tab to see some of the latest investments Binance has made in cryptocurrency projects.
Check all the available options and start clicking through them to get more information on each one. For this example, we will take LayerZero Labs, a project that Binance invested in recently.
When you click on the project’s name, you will be redirected to its Crunchbase overview page. From there, you can look at all the other crypto VCs that have chosen to invest in the project.
LayerZero Labs has 11 investors, most of which are rather big and successful names in the crypto space! This seems promising. Make sure you add it to your spreadsheet.
Create a small list with projects that seem to have a strong venture capital backing (similar to the one above) and you’ll be ready to proceed to the next step.
Step 3 – Visit the website of projects that seem interesting
At this point you should have a list with projects that are still under the radar, most of them not yet launched. What you want to do now is learn more about their fundamentals. What product are they working on? What is the background of their team? In other words, good-ol’ research.
When visiting the website of the projects, look for the following:
- Whitepaper – Read the whitepaper of the project and see if its worth (or even possible) to invest in the project. Some DeFi protocols will allow you to participate as an early user which most likely will earn you rewards down the road.
- Team – Who does the team consist of? What is their background? How long have they been working on the project? Investing in teams tends to be better than investing in their futuristic idea. This podcast episode explains this investment methodology in more depth.
- Early backers – Except from crypto VCs, try to also get more information on Angel investors involved. Do the same for advisors. Are the names ringing any bells? What are their strengths and how does their network look like? How would their input potentially help the project evolve?
If all three parts seem to form a strong foundation to the project’s success, you can keep the name in your list. If you have any sense of doubt or the information is incomplete, it’s best to sit this one out. This step will take quite some time, but your list should be much smaller after you finish.
Step 4 – Join their Twitter and Discord channels
This takes us to the fourth and possibly the most important step – Looking into the community.
A project can only hope to get sufficient liquidity and investment demand if they have a large user base of highly engaged individuals. And the best platforms to review for this purpose is Twitter and Discord.
Twitter should give you a good idea of the followers/engagement ratio. You can also search for hashtags relevant to the project to see if people are talking about it. Generally speaking, the project should have at least a 5-figure following and a highly active posting schedule. This is easy to see when scrolling through the page of the projects you are interested in.
Discord is where you find out more about the project through more involved users. While this channel initially started as a gamer’s chatting platform, it has evolved into the “place to be” for all serious crypto investors. It’s where you see the involvement of the team and how their efforts satisfy the community. It’s also important to remember that Discord the social media platform where most giveaways happen. So if you have lots of time but a rather small portfolio, this is the place to be!
A review of SM channels is the final step you want to take to complete your list of requirements for solid projects. If you notice high engagement and fans with high conviction of the project’s success, you have a winner. And winners are worth investing your time in.
Step 5 – Make use of their product(s) and invest your time
This is the final step, and the one that leads to generating money. If you happen to discover a project early enough, there are several things you can do to benefit from rewards later on.
- Participate in the community and help others learn more about the project – Many projects will reward users, especially in Discord channels by giving them tokens, NFTs, or access to premium features, if these users are actively involved into the growth of the community.
- Use their product(s) early on to qualify for rewards – DeFi protocols, Layer 2 solutions, DEXs, and decentralized games tend to reward users in retrospect. This means that, by using the product in its early stages (especially when investing your money), you qualify for rewards that are distributed at a later time. Several projects have done 5-6 figure airdrops to easly users this way.
- Communicate with the team if you have questions or recommendations – This is a very important step, and one that most people tend to overlook. Building a relationship with the team is what happens after community involvement. If you have some skill that enables you to improve the project, send the team your recommendations. If there are open roles that you can help with apply. If not, volunteer. In any case, try to come closer to the team by showing genuine interest. This will not only open up the doors to potential airdrops and rewards, but it will also strengthen your network to find other investment opportunities down the road.
These three practises will also help you develop conviction which in turn will make you a better investor. The more involved you are with a project, the better you will understand their roadmap and goals, which in turn positions you in a favourable position when it comes to investing.
You should now have a clear overview of the steps you need to follow to execute this research strategy effectively. Finding new projects early on does not guarantee you will enter in presales or private seed rounds. It does however help you get involved with the projects and stay up to date in order to participate in their ICO or buy them before major exchange listings are announced. By doing this you are one step ahead of the crowds who will still be trying to figure out where to invest in.
In summary, we looked at a 5-step process that looks as follows:
- Create a spreadsheet with all the crypto VCs that dominate early investments into projects listed in major exchanges.
- Use Crunchbase to see their most recent investments and find new projects which have several popular crypto VCs involved.
- Learn more about the project by checking its website. Emphasize on whitepaper, team, and backers.
- Check how actively engaged the major social media channels of the project are to get an idea of their fan base and support.
- Participate in the early stages of their product release to benefit from rewards, bonuses, and premium access.
And that’s it!
As always, make sure you correlate the information in this article with your own research in order to draw your own conclusions.