3 Steps to Building a Professional-Level Investment Process
Investing can sometimes feel like a shot in the dark, especially when there are so many opportunities calling your name! In 2022, we are lucky to live in a time when we are seeing unprecedented levels of innovation.
So how can you cut through the noise and construct a formalized way to invest your hard-earned money? Today, we’re going to show you 3 simple steps to building your very own investment process.
#1 Decide what constitutes a good investment to you.
It’s important to note down what your investment criteria are so you can stay objective while researching new opportunities. Remember, there are some really good marketing teams out there that can easily sway your heart and your dollars! Ask yourself these questions when putting together a list:
What type of product am I most knowledgeable about / interested in?
At Klyxx Gaming, we’re focused on Web3 x Gaming because we love gaming and we’re very interested in the crypto technologies.
What stage am I comfortable investing in a project? For us, a VC approach is most applicable here as crypto projects are generally early-stage.
How is this project different than others?
How do the numbers look? Here’s a great resource list for on-chain analytics that can help you quantify your decisions.
How much do I know about the management team / what has this project accomplished so far?
What are some red flags I’m looking to avoid? Read this for some of our red flags in Web3 x Gaming!
Your criteria may change as you learn more, but stick to your plan so you can see what works and what doesn’t.
#2 Make a Pipeline / Watchlist
At its most basic, you’ll want to note down which projects you’ve evaluated and put them into 1 of 3 buckets (break down these buckets as you see fit):
Not Investable - Projects that don’t fit your criteria (stay true to your plan!). It’s still important to track these so you’re not doing the same research over and over.
Potentially Investable - Projects that do fit your criteria. Some will be immediately actionable while others may need some more research. Regardless, these are the ones you want to dive deeper into.
As you research, some may end up in bucket #1 while others end up in bucket #3; make sure to move these projects into the right bucket to stay organized!
Active Investments - Investments in your portfolio. Keep reading to see how to track them!
Notion’s Databases are great for building a pipeline (plus it’s free)!
#3 Track. Your. Investments.
You’re in this business to make a return, so how can you even tell if you’ve made or lost money if you aren’t tracking every invested dollar? Especially in crypto where dollars transform into currencies 3 layers away, it’s imperative to have a good tracking method.
Here are a couple examples of really great reports:
Whether these are used for internal analysis or to send out to investors, tracking investments in a systematic way makes it easier to see your real-time performance.
Conclusion: Organization Makes Room for Creativity
Organizing your thought process in a formalized system frees up your mind to think about the bigger picture like industry trends and how to fine-tune your process to increase your returns.
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