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October 19, 2025How Algorithmic Trading Strategies Can Profit from Undervalued Assets Like MS68 Coins
October 19, 2025
Why Coin Grading Explains Startup Valuation Better Than Any Pitch Deck
After a decade of technical due diligence, I’ve learned one truth: startup valuations hinge on technical execution, not hockey-stick projections. The coin collecting world taught me this. Specifically, the subtle difference between MS68 and MS70 graded coins.
Let me show you how this numismatic principle separates breakout startups from valuation traps. The signs are in the codebase.
When “Nearly Perfect” Becomes Your Investment Sweet Spot
MS68 coins fascinate me. They’re technically superior to 99% of specimens, yet trade below “flawless” MS70s. This mirrors tech investing:
- Hidden gems in plain sight: Like toned coins that reveal character under light, startups with messy early metrics often hide brilliant architecture
- Rarity trumps polish: A coin with 50 known specimens beats a common MS70. Similarly, teams with nuclear-grade domain expertise justify premium valuations
- The perfection trap: Chasing vanity metrics (unicorn status/MS70s) leads to overpaying while missing engineers solving real technical puzzles
My $4,000 Wake-Up Call
I still remember the MS68 Morgan dollar that sold for $4k despite its “flawed” grade. The toning? Exceptional. The rarity? Unmatched.
Last quarter, I saw this play out in real time. A SaaS startup approached us with “only” $200K ARR. But when we peered under the hood:
// Their infrastructure told a different story
const infrastructure = {
autoScaling: true, // Built before product-market fit
costPerQuery: $0.00012, // Could outprice AWS themselves
errorRate: 0.0003% // Better than most public tech companies
};
We paid a 50% premium. Because technical maturity compounds faster than revenue.
How We Grade Startups Like Rare Coins
Our technical due diligence process mirrors numismatic grading – with one addition: we value potential over polish.
1. The Mint Mark Matters
- Unique architectural patterns (your team’s fingerprint)
- Commit history showing engineers evolving their craft
- Documentation that survives employee turnover
2. Scalability’s Natural Patina
Constraints breed genius. We look for:
“That moment when engineers turn limitations into advantages – the technical equivalent of silver developing rainbow toning.”
3. Error Rates Don’t Lie
Our benchmarks make technical debt visible:
| Metric | Early Stage | Growth Stage |
|---|---|---|
| API Errors | < 1 in 200 | < 1 in 1000 |
| Deployment Cadence | Daily | Before lunch |
Valuation Math for Engineers
Technical quality creates valuation jumps:
- Seed Stage: Raw materials – does the prototype work?
- Series A: Proof coin potential – can it handle real users without crumbling?
- Growth Stage: Numismatic rarity – have you built something others can’t replicate?
Here’s our valuation formula:
// Why our portfolio companies trade at 3x revenue multiples
if (techDebtRatio < 0.3 && errorRate < industryStandard * 0.5) {
raiseRound(premiumValuation);
}
Founders: Your Technical Survival Kit
1. Build Your Population Report
Track what matters:
- Test coverage (your technical insurance policy)
- Cost per transaction (efficiency = valuation fuel)
- How long critical hires stay (culture matters)
2. Engineer "First Strike" Features
Create technical differentiators that make investors pause:
"One portfolio company engineered database sharding so elegant, it became their calling card - the NGC certification sticker of their tech stack."
3. Don't Polish Turds
Half of startups inflate technical capabilities by:
- Throwing cloud credits at inefficient code
- Counting API integrations as core tech
- Hiring B-players who can't debug production issues
The Takeaway for Technical Founders
Sophisticated investors hunt for MS68 startups - those with:
- Architecture that ages like fine silver (gains value through use)
- Scalability baked into foundations, not bolted on
- Engineering cultures where learning outpaces shipping
In our data, technical excellence drives 2.4x faster valuation growth from Seed to Series B. Because real technical quality - like truly great coins - reveals itself under pressure.
Related Resources
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