YZi Labs is leaning toward equity investment rather than encouraging early token issuance, according to a recent statement from Ella Zhang on X. The firm, which invests across Web3, AI, and biotechnology, has been advising portfolio companies to focus first on building products that meet real market demand before considering whether a token is necessary.
Product-market fit comes first
Zhang said founders should prioritize achieving product-market fit before moving into token design or issuance. In her view, tokens that lack sustainable utility face a higher risk of losing value over time. Without a clear role inside a working product or ecosystem, a token may struggle to support long-term project development.
She also warned that premature token launches can become a distraction for startup teams. Instead of concentrating on product execution, founders may end up spending too much time responding to market sentiment, price movements, and short-term community expectations. For early-stage companies, that shift in focus can interfere with building a durable business foundation.
A long-term investment stance
The message from YZi Labs suggests a broader preference for fundamentals and long-term company building. Compared with token issuance, equity investment is more closely tied to operational growth, product refinement, and commercial progress. Zhang’s comments also reflect a cautious view of the “launch token first, find utility later” approach that has appeared in parts of the crypto market.
Overall, the firm’s position is clear: sustainable product value should come before tokenization. In this framework, a token is not a shortcut to validation, but a tool that should be considered only after a project has established meaningful use and stronger business readiness.