The renowned blockchain entrepreneur and investor summarizes his thoughts on capital formation incentives in cryptocurrencies, the natural rivalry between VCs and retail investors, evergreen indicators for seed round participants, and challenging times for early-stage fundraising.
Teams are constrained by the dominant meta, admits Kain Warwick
In 2024, even the most successful Web 3.0 teams looking for new funding are constrained by the current meta if they want to raise large rounds, Warwick shared in his latest thread on X with 123,000 followers.
It’s been a while since I put my hat on, so let’s have a little chat about incentives for capital formation in cryptocurrencies.
– kain.eth (@kaiynne) May 3, 2024
From the seed investor’s point of view, signs of project traction – in terms of user base, potential customers, airdrop farmers – remain unchanged: VCs are looking for products with growing TVL, a large number of followers and Telegram and so on.
That said, investors still use these primitive indicators of social engagement to calculate the potential number of retail token buyers.
Therefore, the introduction of points, introduced by Blast, an overrated OP Stack L2, has become the natural way for teams to prepare for fundraising:
So when the points goal appears, everyone has to do it. Because competition in the initial phase of relaunches is intense. If you can incentivize activity and TVL at zero cost you can raise larger funds
Seed rounds completed at $10-50 million in FDV are “pure hedges” for investors, and nearly every one of them is in profit at the end of the day, Warwick admitted.
Crypto Fundraising 101 from the founder of Synthetix
Personally, he recommends revealing a retail token with a $10 million-$1 billion valuation after three rounds of private/seed funding with VC:
Breaking the current meta-retail requires facing the wrath of VCs and regulators. No first-time founder will do this. The incentives are too strong. Perform a low-float token flip after 1-3 private rounds and have 8 to 9 or even 10 net figs card. Or try moving the meta and most likely get a rekt
Furthermore, he acknowledged the role of the 2021-2023 retroactive airdrops as a way to introduce the tokens to a large percentage of retail store owners.
As previously explained by U.Today, Warwick estimates that the meme coin euphoria is a natural catalyst for Ethereum’s adoption of L2.
