In an industry that has witnessed both substantial profits and significant company and project failures, investors exercise caution when choosing where to invest their funds.
During the Bitcoin 2023 Miami event, a panel of experts highlighted several key factors that Web3 investors consider before making investment decisions.
These factors play a crucial role in their decision-making process. Now, let’s delve into these factors and gain a deeper understanding of what captures the attention of potential investors in the Web3 space.
Understanding these insights can help both entrepreneurs and investors effectively navigate the evolving landscape of the industry.
Trust is invaluable!
Brian Estes, Founder, CEO, and CIO of Off the Chain Capital, emphasized the significance of trust as the primary factor that investors prioritize. He highlighted instances where he decided not to pursue deals due to his lack of trust in the management teams involved.
To illustrate this, Estes recounted an incident involving Alex Mashinsky, the former CEO of Celsius, who had falsely claimed that Polychain was one of Celsius’ investors during a presentation. However, it was later revealed that this statement was untrue. “From that day forward, I just never trusted the guy,” Estes recalled.
Supporting Estes’ perspective, Greg Carson, Managing Partner of Humla Ventures, expressed his agreement that trust in the management team is the crucial element in any investment agreement.
The team’s history and track record speak volumes
Another criterion mentioned is the track record of the team. Greg believes that the track record of serial entrepreneurs is a positive factor to consider when making investments.
He explains that this demonstrates that the team has prior experience before embarking on their own project. If they are not serial entrepreneurs, then they could be individuals who have previously worked with reputable brands before pursuing their own ventures.
Team Composition: The building blocks that make up the team
Greg also made an interesting observation about the significance of team composition. He emphasized the importance of having a well-organized team with a diverse range of roles, not solely focused on the CEO.
Greg highlighted that it is crucial to consider aspects such as marketing and other integral components of a company, even if those positions are currently unfilled. Moreover, he emphasized the substantial role the CTO plays in an industry like this.
The technology, the innovation
Regarding the importance of a Chief Technology Officer (CTO), Greg emphasized that the technology behind the product the team is working on is crucial for investors. He stated, “The technology and the team behind it are both vital, especially in the early stages.” Everything will ultimately depend on that team.
Interpersonal dynamics within a team
The Managing Partner at Humla Ventures highlights another important point: the relationship between team members. He points out that sometimes teams are formed on the day of the pitch, with no prior connection between individuals, which poses a significant risk for investors.
Mike Jarmuz, Managing Partner and Co-Founder of Lightning Ventures, shares his preference for siblings as founders when it comes to relationships. He explains, “Siblings make a great founder makeup to invest in because they’ve been handling conflict resolution since they were like five years old fighting over toys.”
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