One of the sessions in the just concluded Binance Blockchain Week Paris 2022 featured the investment director at Binance labs, Alex Odagiu. In his session, he addressed project developers telling them how they can get Binance labs to partner with them and invest in their projects. In his address, he made a list of the key features that Binance Labs examines in a project to determine if it is worth investing in. The boxes these projects must tick before being considered as stated by Alex will be examined below
According to Alex, one of the features that Binance Labs examine before investing in a project is innovation. They examine how unique the solution the project is offering to an existing project is. They check the vision of the founding team and how solid it is. They also assess the problem the project is solving to know if it has been solved before.
Still speaking on innovation, he stated that if the project is different and it adds value to society, to them it is worth investing in.
Solid Business Model
Another feature considered by Binance Labs before investing is the business model of the project. Speaking on this, Alex explained that before Binance Labs can invest in a project, the project has to have a sustainable revenue generation path. Binance labs want to partner and invest in projects that can sustainably generate revenue and has a “product-market fit regardless of other details.”
This is an important criterion because the Binance Labs team have to be sure that the business can sustain itself in the long term.
Once a business model is solid and sustainable, Binance labs also examine the traction delivery of the project. To examine the traction delivery rate, Alex explained that the number of active users the project has is checked. The frequency of the users on the project is also examined as the daily, weekly, monthly and yearly activity of users is examined. For DeFi projects, Binance Labs examines the Transaction Volume (TVL).
If the project does great numbers traction-wise, the project to an extent has a market presence and it is being used by a lot of numbers. Once this box has been checked, Binance Labs can consider investing.
The team is vital to the success of the project. Speaking on a project’s team, Alex explained that the team of the project influences the decision of Binance labs. To know if the team is the right team to be building the project, Binance Labs checks the background and experience of team members to know how relevant it is to the project.
Still explaining the impact of a project’s team, Alex stated that the credibility and relevance of a team’s experience to the project mean that they have the right execution capabilities and they can execute their vision. This makes Binance labs interested in investing in the project.
This criterion is only applicable to token-based projects. According to Alex, Binance Labs takes a look at how clear the tokenomics is and how clearly positioned the token’s utility is. Also, the alignment and alliance between the parties involved are examined. These parties include the team, the investors, advisors and the community. To scrutinize this alliance, Binance Labs takes a look at the token vesting schedule considering the duration of the vesting schedule with all the parties still on board. This is to reveal the long-term vision of the project.
This was the last he mentioned. While explaining this, Alex explained that the valuation of a project should go hand in hand with the stage of the project. This means that the value of the project should grow together with the project itself.
According to Alex, once these boxes are checked, Binance labs can then consider the project for partnership and investment.
At the session’s closing note, Alex informed builders how to apply for an investment on Binance Labs. He stated that on their official site – labs.binance.com, there is a form to fill out. Once the form has been filled, Binance labs will reach out after due consideration.
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