Over the weekend, I read an article on PANews titled "As a VC, How I Missed the 100x Investment Opportunity in Virtuals Protocol" (link attached at the end), which reminded me of my recent thoughts on missing out on Pudgy Penguins. I’d like to summarize some ideas and share them with everyone.

In the PANews article, the author details the entire interaction process with the Virtuals team. In my view, the following key events are noteworthy in this interaction:

First: "The founding team first contacted me in July (during ETHCC), when their fully diluted valuation (FDV) was only $50 million. Prior to this, I had actually heard about the project through mutual friends in the first quarter, when their valuation was even lower."

Second: "I heard from some friends in the crypto space about their rebranding from the PathDAO era and their theories on the tokenization of AI agents. Despite experiencing a bear market and not having a major centralized exchange (CEX) listing, their perseverance in continuing to push the project forward is commendable. Many other founders might have chosen to return funds or abandon the project, but the Virtuals team persisted and returned to the market with a stronger stance."

Third: "Earlier this year, we saw many projects combining crypto and AI attempting to achieve decentralized computing or reasoning. Frankly, many of these projects are just talk."

Fourth: "GOAT sparked a craze around AI agent tokens because it made the market start to imagine the possibilities when AI agents could interact with some form of currency."

"Realizing this opportunity, the Virtuals team acted quickly to demonstrate their technical strength. Their tokenized AI agent LUNA launched on October 16, just a week after GOAT's release."

When the first event occurred, the track where the project was located did not seem promising, or even if there was potential, the uncertainty about the future was still quite large.

Simply having a low valuation is not an advantage.

Therefore, if one is conservative, not investing in this project is not a loss. If it were me, I wouldn’t invest either.

This reminds me of the Tesla case.

A tech investor I greatly admire once said: he only started to bet boldly on Tesla after the Shanghai factory successfully achieved scalable mass production. If Tesla couldn’t reach this point, it could fail at any time. Only after reaching this point could miracles potentially happen.

I strongly agree with this viewpoint; I believe investing in crypto projects is similar. If a track has too much uncertainty and could die at any moment, the risk of betting at that time is still too high.

When the second event occurred, investors could clearly ascertain one thing: the founders of this team are reliable and trustworthy. From the perspective of investing in people, this project passed that test.

But that’s all there is to it; just because the people are reliable doesn’t mean the project will succeed. The success of the project also requires execution, strategy, and various other factors. These elements need to be tested by the market, and at that time, it still couldn’t be seen.

So at this point, if it were me, I still wouldn’t invest, but I would keep an eye on the project’s development. Once I feel that their subsequent operations, strategies, and policies align with my expectations, I would be ready to enter at any time.

Regarding 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 believe they are just pseudo-demand riding the wave.

I think the most important event is the fourth one.

If investors, after the emergence of Goat, believe that AI agents will have significant development space and see that Virtuals’ model of using crypto assets to help finance AI agents and support their development is feasible, then it’s really time to boldly enter.

Because at this point, investors have confirmed: the team is reliable, the direction is correct, and the strategy is right, so the remaining risks should be worth taking.

Therefore, as long as one can boldly enter at this step, I believe it does not count as missing an opportunity.

Although the returns are much smaller compared to entering at the first event, the risks at this point are also significantly lower. For investors with a slightly larger capital volume, I believe entering at this step is the most appropriate.

Reference link:

https://www.panewslab.com/zh/articledetails/k5pf1qfg.html

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