Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups.

Avichal Garg isn't your typical crypto investor throwing money at dog coins and NFT projects. As the co-founder of Electric Capital, he's built one of the most respected crypto-focused venture firms in the space. And his approach to investing is refreshingly grounded in fundamentals, not hype.

Here's what studying Avichal Garg investments can teach us about early-stage crypto investing.

Who is Avichal Garg?

Before founding Electric Capital in 2018, Avichal had a pretty impressive run in traditional tech. He was an early product leader at Facebook, helping build Facebook Connect (which became the foundation for Facebook's platform strategy). He also spent time at Google and worked on the Google Assistant team.

But Avichal saw something in crypto that most people missed. Not the get-rich-quick speculation, but the potential to rebuild fundamental internet infrastructure with better incentive structures.

Electric Capital now manages over $1 billion in assets and has backed companies like Aave, Anchorage, dYdX, and Fireblocks. These aren't speculative bets. They're investments in the infrastructure layer of crypto.

What makes Avichal's approach different

Here's the thing about Avichal Garg investments: they don't follow the typical crypto playbook. While other investors were chasing the latest DeFi token or NFT project, Avichal was methodically building positions in the companies providing core infrastructure.

His investment thesis centers on a few key beliefs:

Crypto is rebuilding the internet's infrastructure layer: Avichal sees crypto as more than just digital money. It's a new way to coordinate economic activity, verify identity, and transfer value. The companies building this infrastructure will capture enormous value.

Developer activity is the leading indicator: Electric Capital publishes an annual Developer Report tracking developer activity across crypto ecosystems. This isn't by accident. Avichal believes that where developers are building is where value will eventually flow.

Regulatory compliance matters: Unlike many crypto investors who see regulation as the enemy, Avichal invests in companies working within regulatory frameworks. This is why Electric Capital backed Anchorage, the first federally chartered crypto bank.

Breaking down Avichal's investment criteria

Let's get tactical about how Avichal evaluates crypto deals. Based on interviews and Electric Capital's portfolio, here's what matters:

1. Real technical innovation

Avichal isn't impressed by whitepapers full of buzzwords. He looks for teams actually solving hard technical problems that others haven't cracked.

This means understanding the technology deeply enough to separate real innovation from hype. Can this team actually build what they're proposing? Is the technical approach sound? Are they pushing the boundaries of what's possible?

For angel investors looking at crypto deals, this is crucial. Most crypto projects are derivative. The ones that matter are building genuinely new technology.

2. Product-market fit in crypto

Here's where Avichal's product background at Facebook becomes valuable. He knows what real product-market fit looks like, and he applies those same principles to crypto.

Are people actually using this product? Not just speculating on the token, but using the underlying technology? Is usage growing organically? Would users be upset if it disappeared?

These are the same questions we should ask about any startup, crypto or not.

3. Understanding of regulatory landscape

Avichal has been vocal about the importance of working within regulatory frameworks rather than trying to circumvent them. He looks for founders who take compliance seriously from day one.

This might sound boring, but it's actually smart risk management. The crypto companies that survive long-term will be the ones that figured out how to operate legally.

4. Developer community traction

Electric Capital's Developer Report isn't just a marketing exercise. It reflects Avichal's core belief that developer activity predicts where value will flow.

He looks at metrics like:

• How many active developers are building on this protocol?
• Is developer activity growing or shrinking?
• What percentage of developers are new versus repeat contributors?
• Are developers building real applications or just speculating?

This data-driven approach separates Electric Capital from most crypto investors who rely on gut feel and token price movements.

What we can learn from Electric Capital's portfolio

Let's look at some actual Avichal Garg investments and what they reveal about his strategy:

Aave: This is one of the largest DeFi lending protocols. But Avichal didn't invest because of the hype around DeFi. He invested because Aave was solving real technical challenges around decentralized lending markets.

The investment thesis was simple: if crypto becomes mainstream, people will need ways to lend and borrow. Aave was building the infrastructure for that.

Anchorage: This one perfectly illustrates Avichal's approach to regulation. Anchorage built institutional-grade custody for crypto assets and became the first federally chartered crypto bank.

While other investors were backing companies trying to operate in regulatory gray areas, Avichal invested in a company building crypto infrastructure the right way.

dYdX: A decentralized exchange focused on derivatives trading. This fits Avichal's thesis around rebuilding financial infrastructure with crypto rails.

But the key insight was recognizing that professional traders would eventually want to trade crypto derivatives on decentralized platforms. dYdX was building the infrastructure to make that possible.

Fireblocks: Security infrastructure for moving crypto assets. Not sexy. But absolutely critical if institutions are going to adopt crypto at scale.

This is classic Avichal: investing in the boring infrastructure that enables everything else.

The contrarian bets that worked

Not all Avichal Garg investments fit neatly into the "infrastructure" category. And those contrarian bets reveal something important about his thinking.

NEAR Protocol: While most investors were focused on Ethereum, Avichal invested in NEAR, an alternative layer-1 blockchain. The thesis was that the crypto ecosystem would eventually support multiple competing platforms, not just one winner.

This turned out to be right. The multi-chain thesis has become consensus, but Avichal was early to it.

Worldcoin: This one raised eyebrows. A global identity network using biometric scanning? Sounds crazy. But if you believe that proving unique human identity online will be valuable in an AI-saturated world, it makes sense.

The lesson here is that Avichal isn't afraid to make contrarian bets when the underlying thesis is sound.

What separates Avichal from other crypto investors

Here's what makes Avichal's approach different from most crypto VCs:

He built products at scale: Most crypto investors have never shipped products used by millions of people. Avichal built products at Facebook and Google that reached billions.

This gives him pattern recognition that pure-play crypto investors lack. He knows what it takes to go from early product to mass adoption.

He focuses on fundamentals, not token prices: While other crypto investors obsess over token price movements, Avichal focuses on developer activity, product usage, and technical progress.

This long-term orientation has paid off. Many of Electric Capital's investments have 10x'd or more.

He bridges crypto and traditional tech: Avichal understands both worlds. He knows how traditional tech companies scale and how crypto protocols grow. This gives him unique insights into which crypto projects can actually reach mainstream adoption.

Tactical takeaways for crypto investors

Studying Avichal Garg investments reveals several principles we can apply to crypto investing:

1. Follow developer activity, not token prices

Developer activity is a leading indicator of value creation in crypto. If developers are abandoning a protocol, that's a red flag no matter what the token price is doing.

Tools like Electric Capital's Developer Report can help you track this. But the principle applies broadly: pay attention to who's building on which platforms.

2. Invest in infrastructure, not applications

Applications come and go, but infrastructure persists. The companies providing core infrastructure for crypto will capture disproportionate value over time.

This means custody solutions, developer tools, trading infrastructure, and identity systems. Boring stuff that enables everything else.

3. Take regulatory compliance seriously

The crypto projects that survive long-term will be the ones that figured out compliance early. Don't invest in companies ignoring regulatory requirements or operating in legal gray areas.

This might mean slower growth in the short term, but it's better risk-adjusted returns over time.

4. Look for technical depth

Most crypto projects are derivative. The ones that matter are pushing technical boundaries in meaningful ways.

Can this team actually build what they're proposing? Is the technical approach sound? Are they solving problems others can't solve?

5. Understand the business model beyond the token

Too many crypto projects have no business model beyond "token goes up." Avichal invests in companies with real revenue streams and sustainable unit economics.

Ask: how does this company make money? Not "how does the token accrue value?" but "what's the actual business model?"

The bottom line for crypto investors

Avichal Garg's approach to crypto investing is refreshingly sane. He focuses on technical fundamentals, developer activity, regulatory compliance, and real product-market fit.

This isn't as exciting as aping into the latest dog coin. But it's a much more sustainable way to build wealth in crypto over time.

For early-stage investors looking at crypto deals, the lesson is clear: ignore the hype, focus on fundamentals, and invest in the infrastructure that will power crypto's mainstream adoption. Whether you're writing $10 million checks like Electric Capital or $5,000 checks as an angel investor, the principles are the same. And if you're looking to connect with other investors who take a similarly grounded approach to evaluating opportunities, including in crypto and beyond, that's exactly what we've built at Angel Squad.

The key is developing pattern recognition around what real innovation looks like versus what's just hype. That takes time, seeing lots of deals, and learning from both winners and losers.

And that's something every crypto investor can learn from studying how Avichal Garg builds his portfolio.