Thesis: Given the exponential rise in new projects being launched on blockchains A-Z, it has been a Herculean task to track the technology of tomorrow, being built today. This challenge does not only exist in the public crypto markets, but also in the private/VC sphere as well. By the time a fund discovers a new project, the VC/Seed rounds have already been completed. In addition to this, teams are also faced with the challenge of finding the right strategic investors/advisors appropriate for serving their specific needs early on. A multitude of launchpad platforms already exist to raise capital from the public when a project is already developed, but where is the launchpad platform for teams to raise capital from strategic investors when they need it most (project infancy- seed stage)?
What if there was a single unified platform that brought together strategic investors & early stage projects, along with a reliable medium to exchange startup capital for allocations(tokens or IOUs) from day one?
Teams — Loss of time + Accessibility
The VC/Seed stage fundraising process is an arduous and time consuming process for teams/founders. Not only must a team sell their vision to strategic investors, but the team must also spend time to find the partner that best suits their needs (marketing, finance/tokenomics, product development etc.). Early on in a project’s development cycle, finding the right partners and access to seed capital is vital for longevity. Excluding yield farming pump and dump projects, the process of building innovative technology and raising seed capital at the same time involves a costly trade-off.
Most teams that spend weeks/months to raise seed capital face competition from “clone” projects which subsequently rush to the market first without strategic backers. By the time the aforementioned team raises capital and forms strategic partnerships, the market is already inundated with several clones, and community members are lost to competitors.
Additionally, crafting the necessary forms ( SAFTs, Google Docs etc..) is an extra step which ideally should not exist in the DeFi industry that prides itself on automated processes and ease of use.
Strategic Investors — The Relentless Hunt To Find Deals
As mentioned in our thesis, the process of finding new seed stage projects and arranging deals is both an opaque and time consuming process. The method of finding and sourcing deals in the VC sphere lacks structure. Either deals are sourced through word of mouth (from one VC to another), or through constantly scouring social media channels (twitter, telegram etc..). It goes without saying, this method leaves many strategic investors at a disadvantage when it comes to finding the right projects on time.
VCPad will be an exclusive and private platform for VC’s/strategic investors to discover new projects at the time of inception. Additionally, it will be a seamless venue for teams to list their projects and details at the very beginning of the development phase. The value proposition of VCPad is;
- Creating an efficient and accessible method for teams to raise seed capital
- Providing “one-stop shop” for strategic investors/VCs to find new projects
- Creating a marketplace for the exchange of seed capital for allocations (tokens)
- Bypassing SAFTs/Forms via NFT’s (ideal for anon. teams), or can include SAFT if desirable on a case-by-case basis.
*NFTs are merely an IOU representation of an allocation, and can be substituted for by any other means which can accomplish this objective if desirable!
A rough sketch of the platform and process is illustrated below.
As depicted above, VCPad will be a marketplace platform that connects strategic investors with teams in the seed stage of their development. The pertinent information for both parties will be displayed on the platform, preferably user-generated (investors + teams upload their info).
The most vital component needed for VCPad to work is deal sourcing for seed stage projects. There are a few methods we would recommend to explore:
- HotNewCrypto (partnership)**
- Deal sourcing from conferences/meetups/hackathons
- Community bounty for referral
- VC referrals**
- Founders submit web application to get listed on VCPad
VCPad will be a listing/marketplace for “sophisticated” investors, and will not officially endorse all projects listed on the platform (in this case, we care more about quantity of listings, auditing every single project would not be feasible). It is contingent upon VC’s to conduct their own due diligence before investing/purchasing the Seed NFTs (as it always has been). VCPad is not the same as an IDO platform which guarantees the security of projects that raise capital from the general public. VCPad is merely a platform for connecting two parties (strategic investors + teams), not an arbiter or guarantor of any kind (unless projects are specifically stated to be approved by VCPad).
Potentially, VCPad could have a native token used for governance/access, where staking tokens (in effect “voting”) would serve as a means of vetting and ranking the desirability of a project. The # of tokens would be staked on various line item criteria (white-paper, technical sophistication, team quality etc.) and would result in a total score based on the sum of individual criteria scores, serving as a sort of governance mechanism. For example, if there are 10 criteria, a score of 1–10 tokens would be assigned/staked per criteria (so a “perfect project” would receive a score of 100, or 100 tokens staked against it, per member). The purpose of introducing this token is to attach “skin in the game” towards the integrity of votes, and also monetize memberships to the platform, where members (strategic investors) can profit from being a part of the ecosystem.
The value of VCPad is not only in the deal flow that comes through the platform, but also the network of investors that are part of the ecosystem. We would recommend dividing the investors into two groups:
- VC’s/Influencers- These investors provide strategic value and resources to a project early on in the development lifecycle. We would recommend a whitelisting process to allow this group into the VCPad platform. A small fee can be charged on a monthly basis for access to VCPad (similar to how HotNewCrypto moved to a $2500/month model, or via the use of a $VCPad token).
- Private Capital- For a lack of a better term, let’s call this the “whale” group. Not all investors in this group are interested in doxxing themselves, or being intimately involved in projects. They just want to invest. That is fine. For this group, we recommend placing a $VCPAD token criteria. For example, in order to access VCPad, this group would have to buy and stake 150,000 $VCPAD for “x” amount of time, which represents the duration of their access to VCPad.
Benefit to VC’s & Private Investors
It goes without saying, such a platform would be of immense value to strategic investors. In terms of the VC’s, this product would provide a seamless and unified platform to source new deals and execute investments swiftly and efficiently. VCPad would save the aforementioned investors a great deal of effort and time in regards to finding seed stage investments. Additionally, investments could be conducted via the transfer of funds for NFTs, bypassing complicated legal work and documentation (if desired). For “Private” investors, they would get the rare opportunity of investing alongside great VC’s at the seed stage, a privilege currently not easily available for “whales”. In essence, the “whale membership/token requirement” investment would result in the appreciation of the $VCPAD token, which will be sold initially to the very VC’s we have on the our platform (so their contributions/work for teams will be compensated not only in securing allocations at better prices, but also capital appreciation on their $VCPad tokens).
Benefit to Teams
It is of the upmost importance to please this group of stakeholders. By providing a platform to access seed capital and VC/strategic resources, teams would get a head start on their development and establish their legitimacy pre-IDO. Also, they would save a great deal of time in terms of early-stage fundraising. Additionally, VCPad will be a valuable platform for anonymous teams who do not want to go through complicated legal work (SAFTs etc) to raise seed capital, in addition to doxxed teams who do wish to go through the traditional legal routes (SAFTs etc.). There are many launchpads in the marketplace today, but providing easily accessible resources from day one, VCPad should be the first preference for seed stage projects. The VCPad platform will provide teams with strategic resources from the point of “a lightbulb going off” in the founders mind, through the seed/public IDO phase, and subsequently post launch.
Teams should not be spending valuable time to procure resources (capital + strategic tools), rather, building a great project and a vibrant community should be the priority. The VCPad ecosystem can lift this burden off the shoulders of teams, and enable them to spend their time & energy on what matters most, the product.
In conclusion, we believe this product could be of immense value to VC’s/investors, teams, and the crypto ecosystem as a whole. We assume that building the actual platform (website section + listing info + NFT sales) will not be a significant challenge, but establishing the right deal sourcing models (HotNewCrypto partnership, VC network etc.) would require some “out of the box” thinking. We anticipate the IDO market is going to continue to get VERY competitive for attracting high quality projects, given the exponential rise of new launchpads being created everyday.
-Abe, Associate — The NewField Fund
As a new investment fund focused on the disruptive technology of tomorrow, we hope to share our world-view and mental frameworks in which we derive our theses. We welcome change and progress, but also strive to understand truths that remain constant and are timeless.
Disclaimer: Nothing written in this research article, or any article by The NewField Fund should be considered as financial, legal, or investment advice of any kind. Investing in crypto is highly risky, do your own research. #DYOR