Original text by Marco Manoppo
Compiled by | Odaily Planet Daily Golem (@web3_golem)
During a bull market, we are always bombarded with stories of those who achieve 100 times returns (like Hyperliquid), but we don't talk enough about the missed opportunities. In this article, I reflect on my story with Virtuals Protocol, how I met the founders early on, and how I missed it as a VC (which now appears to be my first 100x opportunity).
Note: Theoretically, the first 1000x opportunity I missed in my life was in 2019 through a friend angel investor to invest in the Solana seed round, but at that time I was not a VC.
Virtuals is the biggest liquidity risk investment opportunity I missed in this cycle. The founders first contacted me in July at ETHCC when their FDV was around $50 million. I had even heard about this project from mutual friends in the first quarter when their valuation was lower. However, I didn't expect that six months later, the AI agent tokenization platform would become the main character of the current crypto cycle.
The co-founders of Virtuals, Jansen and Wee Kee, do indeed have exceptional courage.
I remember they tirelessly shared information about Virtuals with investors and operators in the field. Since I spent most of my time in Southeast Asia (SEA), I heard from friends in the crypto industry about their rebranding from PathDAO and their story about AI Agent tokenization.
Even in the face of a bear market and without any mainstream CEX listings, their unwavering commitment to the project is impressive. If faced with the same situation, many other founders would refund LP funds or abandon their projects, but the Virtuals team has persevered, and they are now stronger than ever.
What makes me think Virtuals will not succeed?
Earlier this year, we saw a large number of Crypto x AI projects attempting decentralized computing or reasoning. I probably don't even need to say how many of these projects are hollow hype; most projects don't have a real way for retail investors to participate. Of course, users can earn some airdrops by joining networks and running some computations, but nothing excites the retail market more in terms of airdrops than GameFi or DeFi.
Initially, I thought Virtuals might collect unique data through some gamified approach, combined with consumer-centric applications to differentiate user experiences—perhaps even mixed with some 'Ponzi economics'. After all, data is still the cornerstone of any AI model; what better way to incentivize people to share unique data than with magical internet money? Just like in Season 3 of (Westworld).
But it turns out that the cryptocurrency market is becoming increasingly complex and extreme (barbell). We skipped the aforementioned process and went directly into the asset issuance space—which is where the main product-market fit (PMF) of the crypto market lies.
And the Virtuals team, with their previous efforts, is fully capable of seizing this opportunity.
GOAT opens the era of AI Agent tokenization
People often say that luck comes when you are well-prepared for opportunities.
The AI Meme coin GOAT has sparked a frenzy for AI Agent tokens as it opened up the market's imagination about what might happen when AI agents can interact with some form of currency. Although there are still many limitations regarding GOAT, such as whether there is some level of human intervention, the most important thing is that GOAT has made people believe that when AI agents are combined with cryptocurrency, they will open up a whole new world of experiments.
Upon realizing this opportunity, the Virtuals team knew they had to leverage their technology and act quickly.
The tokenization of AI agent LUNA by the Virtuals team was released on October 16, about a week after the GOAT release. If you've been in the crypto industry long enough, you'll know that simply appearing as a 'beta version' before mainstream projects is far from enough. So at a breakfast meeting in Bangkok, Jansen told me that the Virtuals team is doing everything they can to make Luna the first AI agent capable of conducting on-chain transactions autonomously.
Summarizing lessons to succeed
Essentially, reflection is often subjective, but here are some insights I gained after this missed opportunity:
Resilience: The Virtuals team has demonstrated exceptional resilience through continuous iteration of various products. Different founders may have different motivational structures based on their personal reasons and socio-economic backgrounds. Regardless of these factors, the key is to bet on teams that do not easily give up, maintain strong ambition, and always keep up with market trends.
Geographic arbitrage and rapid experimentation: Usually, projects attempting quick experiments (more platform/launchpad models) find it difficult to succeed in Western markets due to high cost structures. However, Virtuals, located in Southeast Asia (SEA), can iterate quickly with lower cost structures while also benefiting from a user base and capital markets priced in USD.
Resilience and business-first priorities: The advantage of Southeast Asian founders lies in their resilience. This region has always prioritized business, learning from the successes of Western/Chinese markets, whether in traditional businesses, Web2 businesses, or crypto, and has been able to localize. The founders of Virtuals have fully demonstrated this business-first mindset, which does not get stuck in ideology or technocracy. They know what they do not understand, what they lack, and what their moat is.
What might happen next
The AI agent frenzy has lasted for about two months, but I feel like I've aged two years. Although the market has shown some signs of fatigue, I believe we will see an even crazier crypto x AI frenzy in 2025. The verticals of cryptocurrency always start from the most 'depraved' corners and gradually evolve into more mature application scenarios.
One thing remains true → Without cryptocurrency, AI experiments would be severely limited.
This is most evident in the AI agent experiment. Without mountains of paperwork and the support of lawyers, an ordinary AI agent cannot access real capital in the TradFi system. We cannot casually give an AI agent real cash, while cryptocurrency is the purest form of currency for digital intelligent life forms.
Therefore, the AI agent experiment will evolve from a GPT wrapper that can only simply post tweets but is valued at over $100 million into more interesting use cases—personally, I hope to see the following next:
More AI agent tokenization frameworks and tokenization platforms. While the Virtuals team has been launching new products, the market remains competitive. Other platforms, such as ai16z, MoemateAI, Spectral_Labs, Griffain, etc., have emerged and captured a certain market share.
Niche AI agent experiments. Projects like freysa, Fi, and Big Pharmai indicate that we can explore more niche experiments and use cases, with the key being how to evolve from interesting experiments to legitimate protocols.
Consumer cryptocurrency x AI agents. How can we maintain the advantages and novelty of AI agents while packaging them as consumer applications in an enticing way? It can even integrate with other AI products (like data, training, or reasoning)—the key is to maintain the novelty of the AI agents.
AI agent x vice (bad industries). I dare not elaborate too much here, but we will see more AI agents creating significant cash flow by entering bad industries (gambling, adult industry, etc.) rather than just through their tokens or trading in the crypto market.
AI agent x payments. Advancing the interaction between agents and how we use agents to unlock a more seamless off-chain and on-chain payment experience.
When it comes to community-driven projects, the VC mindset can sometimes be flawed. The key to breakthroughs is to always maintain an open mind towards new experiments, unbound by traditional norms, and to be adaptable rather than idealistic.
Related Reading
VIRTUAL's market cap has reached $3 billion; what stories are AI projects within the ecosystem telling?
Want to prospect in the Virtuals ecosystem? I contribute a thought.
