Someone asked me today what I look for in a 🌱seed project & how much is too little/too much to made me realize there just isnt enough info out there for the avg degen to consider if you want to angel/seed invest.
My take might not be popular: but its honest πŸ€·β€β™€οΈ
Rule #1: Try NOT do seeds/angel investments.
Why? Well, the honest trust is that $ETH will likely 3-5x ROI in the next 2yr by simply hodling
OR, u can give πŸ’° to a start-up that wont show ROI for >2 years + risks exploits, irrelevance, forking/copy-cats & lack of a value moat.
@tbr90 touched on this back in Jan when he noted it is often better to be the 2nd 🐭.
I have used the metaphor of the 2nd mouse in relation to seed investments several times since. The ref relates to a clip in Catch me if You Can w/Christopher Walken:
In general, 🌱seeds are NOT capital efficient.
Wen you invest, you are tying up capital for:
1) a cliff period where your funds are making NO yield
2) a vesting period where your funds trickle back to you at what (you hope) are outsized returns over years
Although I look at pitch decks on a daily basis, & I support teams whose projects are is EXTREMELY rare that I take a seed/angel position in a protocol.
Why is that Ser Condom?
Well, anon its because they're illiquid af.
In general, I allocate only 5% of my portfolio to early stage angel/seed investments & write off the capital on my PnL until unvesting.
Why? B/c there is an ugly trend among projects to require cliffs/vests that are βŒ›οΈYEARS long. Sometimes longer than defi has even been around
Crypto moves at the speed of lightening: a lot of πŸ’© can happen in the 2-3 years it takes to reap your investment in a project.
Exploits, new tech making your investment obsolete, lack of a moat, poor execution, etc all add risk to your ROI. A 10x on a seed is NOT guaranteed.
IF you want to 🌱 an investment, know that smol size is OK. $10-20k is perfectly acceptable as a minimum investment for many SAFTs.
If you want a smaller investment, consider a group allo via someone like @blocmatesdotcom or exposure via a dao like @DigitsCapital.
IF you decide to seed, make sure you clearly understand what you're investing in: tokens v equity.
Be sure to understand any warrant structure, cliff windows or vesting periods for your ROI.
Wen ever possible, have an attorney look over a SAFT bf you sign.
Disclosure: This year, I have taken only 2 seeds: @tapioca_dao & @Dolomite_io. I am proud to have invested in both even tho I may have turned them down several times first🀣
I have no affiliation w/any entities mentioned & have never been paid to post. Opinions are my own. 🍌🀝
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