Crypto / Web3 Startup Due Diligence at Series A Stage: Complete Investor Guide
Blockchain infrastructure, DeFi protocols, NFT platforms, crypto exchanges, and Web3 applications building on decentralized infrastructure. This guide focuses specifically on due diligence considerations at the Series A stage ($5M–$20M raise, $20M–$80M post-money).
Series A Stage at a Glance
The company has proven product-market fit and is raising to scale: hiring, marketing, and expanding to new customers or geographies.
Key Metrics for Crypto / Web3 Startups at Series A
These are the 4 metrics that institutional investors evaluate for Crypto / Web3 startups. DDR automatically extracts and benchmarks these from pitch deck data and OSINT sources.
Red Flags in Crypto / Web3 Pitch Decks
DDR detects these 3 sector-specific red flags automatically when screening a Crypto / Web3 startup pitch deck. Each flag is severity-weighted based on impact to investment thesis.
Due Diligence Focus Areas: Crypto / Web3
These are the priority investigation areas for Crypto / Web3 startups that experienced investors always verify before committing capital.
- Smart contract audit reports from recognized security firms
- Token economics and distribution analysis
- Regulatory framework: SEC vs. commodity classification
- Treasury management: stable vs. crypto-denominated reserves
Key Questions to Ask the Founder
These founder interview questions surface the most common gaps and risks in Crypto / Web3 startup pitches.
- What is the SEC's classification of your token and what is your legal strategy?
- Walk me through your smart contract audit process and what was found/fixed
- How does your protocol generate revenue and how does it accrue to token holders?
Comparable Companies & Exits: Crypto / Web3
Regulatory & Compliance Risks
- SEC Howey test classification: tokens may be deemed securities
- FinCEN money transmission licensing for exchanges
- OFAC compliance: screening for sanctioned entities on-chain
- EU MiCA regulation: comprehensive crypto asset regulatory framework
OSINT Signals to Check
DDR automatically checks these 4 signals from public sources when analyzing a Crypto / Web3 startup:
- On-chain analytics: Dune dashboards, Nansen, Chainalysis
- Smart contract audit reports (public on GitHub)
- Token holder concentration (top 10 wallets as % of supply)
- OFAC SDN list screening of founding team
Crypto / Web3 Due Diligence — All Guides
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