So you’re an angel investor looking to fund some web3 projects and you’re thinking where do I start? There’s a lot of noise out there and a hype cycle might burst within a span of a week. Promising projects are popping up every day it seems. It’s hard to keep up with it all, but having a framework in mind will be helpful. 

Like investing in any promising web 2.0 company, the criteria to think about are not so different. It’s important to look at:

• Team

• Network Effect

• Brand Strength

• Intellectual Property

• Timing

Follow what people are talking about, but like getting involved in any project, do you own research!

• Think about your own criteria - does it matter that the team is doxxed or not? If the team is not doxxed, how can you find ways to trust that they will deliver?

• What projects have team members worked on or involved in?

• Does the technical team have contributions to open source projects and/or have they cut their teeth at traditional web2 tech companies?

• Does the team understand regulations and compliance around their product?

• Who are the other investors and advisors in the project?

• Does this project lift the area that it is in? (example BAYC bringing the blue chip NFTs to more investors, thus creating a wave for smaller NFT creators to have their projects known)

• What community does the project serve or create?

• How is the ecosystem engaged and invested in the project?

  • What does investment from the core demographic look like and is it compounding the network? Investment might be measured in discord engagement, number of memes made, ability to hire engineers etc… ** **

• How has the project gained traction?

• What are the opportunities for the project to gain brand recognition?

• How invested are people in the project? Investment might look like people contributing to the project or holding on to the asset created by the project.

• Is the execution specific and unique to this project?

• What layer(s) do you believe have the most potential and does it align with this project’s trajectory? (Blockchain layers explanation)

• What data does this project create or aggregate that is a value add in this space?

• Why now? 

• If not now, what are the necessary turning points before you would feel comfortable investing?

• Market analysis, is the space ready for this project to succeed?

Now that you have some idea of what framework to use when vetting web3 projects, how do you find projects to invest in? One of the easiest ways to start off angel investing in web3 is using AngelList Syndicates. Syndicate is a Single Purpose Vehicle (SPV) legal entity created to make an investment in a single startup. Investors can use a syndicate to crowdsource money from other investors in order to reach a certain financial goal. With syndicates, leads source and support the investment and generally make some percentage of the profits that their investment creates, while allowing other investors to take part in the deal.

Becoming an angel investor on AngelList requires you to be an accredited investor.

Two main ways of joining an AngelList syndicate are to apply to a syndicate or to be invited to join a syndicate. 

When applying to a syndicate, AngelList recommends that you: 

• Fill out your AngelList profile fully

• Add any investments you've made to your AngelList profile

• Fill out your investment preferences/thesis

• Include a thoughtful note when applying

If possible, reaching out to the leads through an introduction is ideal. Check on LinkedIn or AngelList if you have mutual connections. 

Which leads to the second recommendation for joining a syndicate - be invited! Ideally you know someone who is already part of the syndicate or is leading the syndicate you want to join. Utilize your network in order to understand what deals are out there and what projects people believe in. There are many different kinds of investment group chats, events and communities where people are talking about the deals they are seeing. Stay up to date by asking trusted colleagues and putting your network to use. 

Investment groups are a way for folks who don’t meet the criteria to be an accredited investor to invest collectively. To qualify as an investment club, a group must not make, nor propose to make, a public offering of its securities; and must not have more than 100 members. 

Syndicate makes joining or starting an investment group to invest in web3 straightforward and simple. Syndicate was created with the intention of helping people form investment clubs to support web3 projects. Joining a Syndicate here is a little different than joining the AngelList Syndicate, many Syndicates are DAOs and the platform that the groups choose are specific to the organization. Many Syndicates are on Discord and there is an application to complete before being invited to the group. Syndicates has a list of organizations on the platform, which is a good starting point to see if there are any groups that are interesting and to reach out from there.

Kai Wu, Sparkline Capital, https://www.sparklinecapital.com/post/value-investors-guide-to-web3

AngelList Syndicate Documentation

For being sources of inspiration for this guide