Tool Guide: Track VC trends and find the next high-potential currency

Original author: THE DEFI INVESTOR

Original compilation: Deep Chao TechFlow

Many crypto venture capitalists (VCs) made crazy amounts of money during the 2021 bull run.

Beyond that, most of the projects that outperformed during the last bull market had strong backers. Thats why I think its important to pay attention to what VCs are buying.

Of course, blindly copying VC deals without formulating your own investment thesis is not a good idea.

However, tracking their fund activity can help spot new trends and discover coins with high potential.

So, here are a few ways to monitor crypto VC activity and how to leverage this information,

Use DeFillama

DeFillama has a dashboard showing the latest crypto funding rounds.

You can easily access it via:

• Go to DeFillamaHome page

→ Click Raises” (located on the left side of the page)

→ Click Overview

DeFillama’s Crypto Fundraising Page

After completing the above steps, you will be able to sort hundreds of projects by amount raised, investors, chain, industry, and more.

I usually look for the following items:

• Raised a large amount of money (e.g. over $20 million)

• Brand new things are being built (one example is Eclipse, the first Ethereum L2 to leverage the Solana VM for higher performance)

Many people seem to believe that it is not worth investing in projects that have raised large amounts of money from VCs and already have high token valuations at launch.

However, Celestia’s $TIA is an example that this is not always the case.

Celestias token, called $TIA, had a fully diluted valuation of $2 billion at launch, and its team raised $50 million from VCs. Yet $TIA grew 8x in just a few months last year.

Obviously, this doesnt mean that all projects with strong venture capital backing will perform well, but its generally worth paying attention to those that have raised significant amounts of funding.

Use Spot On Chain

Spot On ChainIt is an on-chain data analysis platform that can easily interpret on-chain data.

Its database tagged hundreds of influencers, investment funds, and CEXs.

You can use it to help monitor VCs on-chain activities, using its 2 functions:

1. Label

For example, if you want to track the on-chain activity of well-known crypto fund a16z, you can simply search for a16z in the Spot On Chain search bar.

After doing so, Spotonchain will display the latest on-chain transactions, the breakeven details of the tokens, and the tokens held by the a16z public wallet address.

Spotonchain tracks the most popular crypto VCs. Therefore, you can monitor the on-chain activity of almost all major crypto funds this way.

2. Signal

On the platform you can find a feed with simplified on-chain signals that display the most interesting things currently happening on the chain.

Sometimes you can also find here details about transactions by venture capital firms or other well-known crypto entities when they moved large amounts of money.

You can leverage this data in a variety of ways.

For example, in most cases a whale moving a large amount of token supply to a CEX indicates its intention to sell the token, so it is a bearish thing.

Using CryptoRank

The last tool I want to introduce isCryptoRank, it also provides some valuable insights into VC activities.

To find them, follow these steps:

• Go toCryptoRank

• Click on “Fundraising” → Funds

• Choose a crypto fund

Once you do this, you will be able to view the past performance of all projects that are part of this cryptocurrency fund’s portfolio, their main investment categories, and the tokens in which they invested.

On the fund page, you can see a metric called Retail ROI listed for each VC. This is useful for determining which VCs are highly profitable.

The higher this Retail ROI, the better because this metric basically shows how successful the majority of the projects in that VC portfolio are.

Based on Retail ROI and other data shown by CryptoRank, you can compile a list of the most profitable venture capitalists.

Once completed, you can follow these investors onDeFillama RaisesSort by Latest Crypto Fundraising on the page to see only the best VC funded projects.

How to profit from all this VC data

Now that Ive covered how to monitor VC activity, lets talk about how to actually use this data to make some money.

Most (but not all) projects that raise funding from VCs do not have tokens.

While this means that in many cases you cant directly bet on its success by buying its tokens, there are two other things you can do:

1. Create an X (Twitter) list and add to it the official X accounts of projects that have raised funding from VC and that you find the most interesting

This may be helpful if you plan to buy its token when it launches and want to make sure you don’t miss out on its token launch event.

Rather than just following X accounts of these projects, its much easier to monitor an X list on a regular basis so you can stay up to date on their progress.

Historically, in bull markets, newly launched coins outperform.

Thats why I think its a good idea to focus on new/upcoming protocols that have just raised funding from VCs.

2. Get their airdrop (when possible, and the project has active products)

If a project has raised a lot of money (say, over $20 million) and has an interesting product, its airdrop may be worthy of placement.

Generally speaking, the more money a project raises from VCs, the higher the valuation of its future tokens, which means the project is likely to be allocated a large airdrop.

Eigenlayer case study

Over the past few months, the Ethereum Redemption ProtocolEigenlayerThe growth rate is astonishing. It is now the third largest application in DeFi based on TVL.

Last March, the team announced they had raised $50 million in funding.

This happened even before the Eigenlayer mainnet went live. Considering that crypto was still in a bear market at the time, $50 million was quite impressive.

I had heard about Eigenlayer before the team announced the news, but when I learned about its funding round, I started digging deeper.

After learning about Eigenlayer’s large funding round and its innovative products, I followed it closely and started arranging its airdrop as soon as it was officially launched.

This gave me a head start over people who had discovered Eigenlayer and its points program layout airdrop only two or three months ago.

So, here’s a practical example of how you can leverage crypto fundraising activity data to your advantage when it comes to airdrops.

In short, my strategy is:

• Monitor the latest crypto fundraisings (the easiest way is with DeFillama)

• Studying deals that have raised significant amounts of money

• Add the most interesting projects to my watchlist to monitor their progress and plant their airdrops when possible

With this strategy, you can discover many high-potential airdrop opportunities earlier than most people who play airdrops.