What Coin Grading Teaches Us About Startup Valuation: A VC’s Guide to Technical Due Diligence

Why VCs Should Think Like Coin Graders When Evaluating Tech Startups

As a VC, I hunt for signs of technical excellence and efficiency in a startup’s DNA. Think of it like this: numismatists pore over every detail of a rare coin’s condition and history. We investors need to bring that same sharp eye to a startup’s technical foundations. The recent buzz around an AU58+ Capped Bust coin offers some unexpected lessons for how we assess early-stage tech companies.

The Grading Metaphor: Why Precision Matters

When collectors debate whether a coin was “undergraded by 2 points” or “overgraded,” they’re doing the same kind of rigorous analysis we use in technical due diligence. For startups, that means looking at:

• Code Quality: Like a coin’s luster and surface preservation
• Architecture: Similar to a coin’s strike quality and structural integrity
• Technical Debt: Think surface abrasions that wear down long-term value

Four Technical Factors That Impact Valuation

1. The “POP 1” Principle: Uniqueness in Tech Stacks

A POP 1 coin—the only one graded at that level—often gets a premium valuation. Startups with genuinely unique technical approaches deserve the same. We ask:

“Not just what frameworks you use, but how you’ve adapted them to solve problems no one else has tackled.”

2. The “TrueView” Test: Visibility Into Systems

Coin forums get frustrated with small, blurry images. We feel the same when startups can’t clearly show their architecture. Every solid technical team should offer:

• Comprehensive system diagrams
• Documented API specifications
• Clear performance benchmarks

Actionable Due Diligence Checklist

For Seed Stage:

Inspect their prototype like a coin under a magnifier:


# Sample code review questions
def technical_due_diligence:
return [
"Can they explain every dependency?",
"Is there a clear path to scale?",
"How unique is their solution?"
]


For Series A:

Search for third-party validations—the startup world’s version of CAC stickers:

• Independent security audits
• Performance testing results
• Technical advisory board members

Conclusion: Grading for Growth

Just as numismatists spot an undergraded gem, experienced VCs know when a startup’s technical strengths outpace its current valuation. By applying the same principles that give a Capped Bust coin value—rarity, condition, and authenticity—we make smarter bets on early-stage tech companies.

Keep in mind: whether it’s coins or startups, surface impressions can mislead. Real value comes from looking deeper.

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