Five Rules for Investing in (BitClout) Projects
I tell my friends that BitClout is like a university and investing in projects on BitClout is like a crash course in “Investment 101” and a true test of your judgement.
What are BitClout Projects?
Projects on BitClout are any small or big initiatives that leverages the data from the BitClout block-chain and aids users in some way. These could include projects like
- Telegram and Discord Bots like KnowYourClout (Learn more about user) and BitCloutSignal (Buy/Sell Alerts)
- Bots like GlobalClout (notifies users about their global posts) and Coinomy (notifies users about their coin trades)
- Large projects like BitCloutPulse (Trading Platform), Creatiers (Upwork for BitClout) or SignalClout (Data Feed+Analytics for BitClout)
- Independent Nodes like Love4Src (Developers Node), CloutingAroundDev or Nachoaverage
- NFT Marketplace like NiftyList that showcases NFTs
- Creator Onboarding Initiative like NFTPlus or CreatorsICO
If you are able to make a few good calls and get in early (even using insider information), not only do you get 2–5X returns in days or weeks, but you also get the satisfaction of supporting a great project and team that is contributing to the platform. The bonus of course is that you become friends with folks who you might work with some day.
Here are some rules that I apply before I invest into projects on BitClout. Looking at how investors have looked at my pitches in my past startup pitches, these are relevant to the startup world too.
1. Does the project / product solve a problem?
This is usually the first slide of any startup pitch deck — any project or startup needs to be clear on what problem they are solving and if that is a big enough problem in the first place. On BitClout, User Experience and Discoverability are the two main problems and that is what we decided to address with CreaTiers. If the problem is too small, it may not be the 10X project that you are looking for. Depending on your investment thesis, you might throw in a small amount. But, this is not going to be the one that makes you a fortune.
2. How is the product / project solving the identified problem?
Once the problem is identified and defined, the product needs to solve the problem with a reliable, scalable and effective solution. A clear demonstration that the solution is reliable and effective is best demonstrated by a proof of concept and by defining the features, use-cases, personas and roadmaps that you have lined up. This ensures that you are not building a small project but a real solution that will make it big.
While solving the problem is one part, making sure that the solution works at scale is important as well. That is where a good engineering and Devops team being behind a project is equally important. Even if the initial solution is a quick-fix or a stop-gap arrangement, the roadmap to solving the defined problem at scale needs to be there from day one. The initial solution could be something that you get done manually and start adding value to the community. Over time, you can automate the process and build a web application around it.
3. How good is the team?
VCs are known to look at the Team first and many large silicon valley success stories include stories of million-dollar seed-round investment checks based on a paper napkin vision just because the VCs believed the team was one that could deliver on that vision. The same goes with BitClout. Speaking to core team members and making sure that they can work with each other and also have the relevant skillsets together and the ability to make the vision a reality are key to the success of a project. This does include a little bit of a gray area. But then, if it was all black and white, a computer program would probably do this better and beat you to it.
4. Traction: Prototype, Roadmap and Go-To-Market Strategy
The Team has identified a problem and a potential solution for the problem. It also appears like this is the right team to execute on the vision for the solution. Is that good enough? Another check that helps reduce the risk is to see the proof of the pudding. How far has the team progressed on the idea and how fast are they executing on it so far? This tells you how well they will execute in the future and also how they will face roadblocks that they come across. Specifically getting into understanding what challenges they faced and how they overcame it or posing potential challenges before them and seeing how they rise to the challenge would be a good test before throwing in the dough.
5. Competition: Who else is solving the same problem and how is your solution different?
Are there other projects solving the same problem (with better execution and team skills)? If yes, that could be a huge red flag. If either other teams are doing it and the said project has a different approach or if other teams are doing it with the same concept, but this project can prove that they have a more effective solution or plan, then the project is worth a consideration for sure.
If you are able to get an all-clear on all or most of these questions, it makes sense to invest in the project. More importantly, the project and the team has a greater chance of success and is worth keeping an eye on for the future. All the best for your upcoming investments and do let me know if you have any other suggestions of checks to do before investing!
Disclaimer: This post is for informational purposes only. It should not be considered Financial or Legal Advice. Do consult your financial advisor before making any investment decisions.”
