As a Bitcoin investor, how can you ensure that you avoid making the wrong investment decisions and minimize the risk of losing your funds?
During the Bitcoin 2023 Miami event, Greg Carson, Managing Partner of Humla Ventures, emphasized the significance of diligence in investing. He urged investors to ask thorough questions about the projects they are considering until they achieve complete clarity.
Carson also shared some example questions he asks when making investments, such as requesting references from companies and individuals they have collaborated with, as well as understanding the technology or blockchain they are utilizing, particularly if it lies outside the Bitcoin ecosystem.
According to Greg, if a team is unwilling to share, he advised not calling them back. Another point he made was for investors to steer clear of FOMO (fear of missing out).
Brian Estes, Founder, CEO, and CIO of Off the Chain Capital, bluntly advised investors to simply buy Bitcoin. He stated, “The easiest thing to do is just buy Bitcoin.”
When reflecting on his own journey in the Web3 space, he disclosed that in 2015, he started with a diverse portfolio consisting of stocks from Coinbase and Polychain.
However, upon looking back over the past nine years, he believes that he would have been better off just buying Bitcoin and holding onto it.
Mike Jarmuz, Managing Partner and Co-Founder of Lightning Ventures, shared a similar sentiment to Brian. He suggested that “investing in anything other than Bitcoin” is a way to avoid problems like those with FTX.
Furthermore, Mike mentioned that when he receives emails about projects developing utilities on the blockchain, such as the metaverse and social media, he doesn’t pay attention to them.
The power of secondary investment market
When asked about their prospective investments, Brian mentioned that his company remains open to investing in projects with a strong proposition and value, as their fund is evergreen.
He also highlighted that while the fund’s activity fluctuates based on market value, they established themselves as the leading blockchain hedge fund from 2016 to 2021.
Greg shared that although his firm has substantial “dry capital” for early-stage investments, their primary focus lies in the secondary market when it comes to investing in blockchain companies. He stated, “We are actively pursuing secondary direct investments in venture opportunities.”
Additionally, he mentioned that they are investing in the secondary market by purchasing founder shares or earlier angels. They also engage in limited partner deals and provide special purpose vehicles (SPVs) for their investors.
SPVs, which are legal entities, enable multiple investors to pool their capital and invest in a single company. The primary advantage of the secondary market is that investors can acquire stocks of companies with proven track records at significant discounts.
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