I agree with you here as well. However, it isn't binary.
There are a lot of instances where it makes sense pending:
- A prototype
- Team and experience
- Traction
- Idea
- Whitepaper
- Terms
Reputation matters. If you have a team with a track record, then you have something to go with if the idea and underlying tech makes sense, i.e. they have a whitepaper that measures up.
Ethereum didn't have a prototype, but it was a good investment.