On the weekend, I read an article titled "As a VC, How I Missed the 100x Investment Opportunity of Virtuals Protocol". Thinking about how I had just written about missing out on Pudgy Penguins a few days ago, I summarized some thoughts and shared them with everyone.
In this article, the author detailed the entire process of his interaction with the Virtuals team. In my view, the following key events are worth noting in this interaction process:
First: "The founding team first contacted me in July (during ETHCC), at which time their fully diluted valuation (FDV) was only $50 million. Before that, I had actually heard about this project through a mutual friend in the first quarter, when their valuation was even lower."
Second: "I heard from some crypto friends about their brand repositioning from the PathDAO era, as well as their theories on AI agent tokenization. Despite the bear market and no major centralized exchange (CEX) listings, their perseverance in pushing the project forward is admirable. Many other founders might have chosen to return the funds or abandon the project, but the Virtuals team persisted and returned to the market in a stronger position."
Third: "Earlier this year, we saw many projects combining crypto and AI trying to achieve decentralized computing or reasoning. To be honest, many of these projects were just empty talk."
Fourth: "GOAT sparked a craze around AI agent tokens, as it allowed the market to start imagining the possibilities when AI agents can interact with some form of currency."
"Recognizing this opportunity, the Virtuals team quickly acted and demonstrated their technical capabilities. Their tokenized AI agent LUNA was launched on October 16, just a week after GOAT's release."
When the first event occurred, the prospects of the sector the project was in were still unclear, or even if there were prospects, the future uncertainty was still quite large.
A low valuation alone is not an advantage.
Therefore, if I were to be conservative, there would be no regret in not investing in this project. If I were in that position, I wouldn't invest either.
This reminds me of the Tesla case.
A tech investor I greatly admire once said: he started boldly betting on Tesla only after the Shanghai factory was able to successfully achieve mass production. If Tesla had not reached this step, it could have collapsed at any time. Reaching this step is when the possibility of a miracle appearing afterwards arises.
I fully agree with this view, and I believe investing in crypto projects is similar. If there is too much uncertainty in a sector, and it could die at any time, the risk of betting at that time is still too high.
When the second event occurred, investors could clearly see one thing: the founders of this team are reliable and trustworthy. From the perspective of investing in the team, this project has passed this test.
But that's all there is to it - the team is reliable, but that doesn't mean the project will definitely succeed. The success of the project still requires success in execution, strategy, and various other aspects. These factors need to be tested by the market, and at this point, it is still not clear.
So at this stage, if I were in that position, I still wouldn't invest, but I would follow the development of this project. Once I feel that its subsequent operations, strategies, and policies are very much in line with my expectations, then I would be ready to get involved at any time.
For the third event, my feelings are exactly the same as this investor's - I am not optimistic about the vast majority of early AI + Crypto projects, and I believe they are false demands taking advantage of the industry trend.
I believe the most important is the fourth event.
If investors, after the appearance of GOAT, believe that AI agents will have great development potential, and see that the model of Virtuals using crypto assets to help AI agents raise funds and support their development is feasible, then this is the time they can boldly get involved.
Because at this point, investors have confirmed: the team is reliable, the direction is correct, the strategy is correct, and the remaining risks are worth taking.
So as long as they can boldly get involved at this step, I don't think it can be considered a missed opportunity.
Although the returns would be much smaller compared to getting involved at the first event, the risk at this point is also much lower. For investors with a larger capital base, I believe getting involved at this step is the most appropriate.
