{"id":471957,"date":"2022-07-08T16:44:40","date_gmt":"2022-07-08T13:44:40","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/the-risks-and-benefits-of-vcs-for-crypto-communities\/"},"modified":"2022-07-08T16:44:40","modified_gmt":"2022-07-08T13:44:40","slug":"the-risks-and-benefits-of-vcs-for-crypto-communities","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/","title":{"rendered":"#The risks and benefits of VCs for crypto communities"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a407f0c4ca8a\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a407f0c4ca8a\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#%E2%80%9CThe_risks_and_benefits_of_VCs_for_crypto_communities%E2%80%9D\" >&#8220;The risks and benefits of VCs for crypto communities&#8221;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Even_VCs_were_LUNAtics\" >Even VCs were LUNAtics<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#What_is_a_crypto_VC_anyway\" >What is a crypto VC anyway?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Crypto_VC_firm_to_a_hedge_fund_is_a_continuum\" >Crypto VC firm to a hedge fund is a continuum<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Liquidity_vs_long-term_community_building\" >Liquidity vs. long-term community building<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Australias_world-leading_crypto_laws_are_at_the_crossroads_The_inside_story\" >Australias world-leading crypto laws are at the crossroads: The inside story<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Thailands_Crypto_Utopia_90_of_a_cult_without_all_the_weird_stuff\" >Thailands Crypto Utopia  90% of a cult, without all the weird stuff<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Old-school_photographers_grapple_with_NFTs_New_world_new_rules\" >Old-school photographers grapple with NFTs: New world, new rules<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Risky_business_Celsius_crisis_and_the_hated_accredited_investor_laws\" >Risky business: Celsius crisis and the hated accredited investor laws<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Soulbound_Tokens_Social_credit_system_or_spark_for_global_adoption\" >Soulbound Tokens: Social credit system or spark for global adoption?<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#VCs_add_investor_network_effects_and_tokenomics_advice\" >VCs add investor network effects and tokenomics advice<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Wen_token_sale\" >Wen token sale?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#The_best_of_blockchain_every_Tuesday\" >The best of blockchain, every Tuesday<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Investor_protections\" >Investor protections<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Are_faceless_DAOs_not_accountable_to_investors\" >Are faceless DAOs not accountable to investors?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Australias_world-leading_crypto_laws_are_at_the_crossroads_The_inside_story-2\" >Australias world-leading crypto laws are at the crossroads: The inside story<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Thailands_Crypto_Utopia_90_of_a_cult_without_all_the_weird_stuff-2\" >Thailands Crypto Utopia  90% of a cult, without all the weird stuff<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Old-school_photographers_grapple_with_NFTs_New_world_new_rules-2\" >Old-school photographers grapple with NFTs: New world, new rules<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Risky_business_Celsius_crisis_and_the_hated_accredited_investor_laws-2\" >Risky business: Celsius crisis and the hated accredited investor laws<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/buradabiliyorum.com\/en\/the-risks-and-benefits-of-vcs-for-crypto-communities\/#Soulbound_Tokens_Social_credit_system_or_spark_for_global_adoption-2\" >Soulbound Tokens: Social credit system or spark for global adoption?<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CThe_risks_and_benefits_of_VCs_for_crypto_communities%E2%80%9D\"><\/span>&#8220;The risks and benefits of VCs for crypto communities&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p style=\"float:right;margin:0 0 10px 15px;width:240px\"><img decoding=\"async\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Perils-of-VC-funding-for-crypto-community-building.jpg\" class=\"type:primaryImage\"><\/p>\n<pre><code>                &lt;p&gt;&lt;strong&gt;Traditional venture capital funds drive valuations through multiple funding rounds. Startups aim for initial public offerings or other exits. Then the sharemarket decides upon a more realistic valuation.&lt;\/strong&gt;\n<\/code><\/pre>\n<p>But in cryptoland, tokens introduce market capitalization while a company is being built.<\/p>\n<p>This means there are a lot of competing interests and agendas. Token sales for Web3 startups can be the bastard child of a personality cult leader founder and a bunch of VCs, raised by a group of Discord-dwelling degens manning a DAO, while speculators trade 24\/7 and the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a> circles.<\/p>\n<p>So, how do founding teams get the balance right between the needs and wants of the VCs and whats best for the community? Are the interests of VC funds aligned with the interests of token holders?<\/p>\n<p><strong><\/strong><\/p>\n<p>\u00a0<\/p>\n<figure id=\"attachment_12616\" aria-describedby=\"caption-attachment-12616\" style=\"width: 615px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-12616\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Perils-of-VC-funding-for-crypto-community-building-1024x576.jpg\" alt=\"VC Funding\" width=\"615\" height=\"346\" \/><figcaption id=\"caption-attachment-12616\" class=\"wp-caption-text\">VC funding is necessary, but are VCs always working in the best interest of the community?<\/figcaption><\/figure>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Even_VCs_were_LUNAtics\"><\/span>Even VCs were LUNAtics<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400\">Lets start with LUNAs collapse. Who did the due diligence? VC funding can have a big impact on whether the community invests or thinks a project is legitimate or not. The stamp of big-name funds carries credibility and traction before retailers can invest.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Retail investors got rekt when Terras algorithmic stablecoin project and ecosystem collapsed in May. The stories of homes and life savings being lost and suicide hotlines being posted on Reddit were alarming. Memes of <em>Squid <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">Game<\/a>s<\/em> and Bernie Maddoffs 150-year prison sentence were <\/span><span style=\"font-weight: 400\">mashed up next to Terra founder Do Kwons attempt to save the ecosystem with a phoenix-like token called Luna 2.0.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Perhaps representative of retail investors in <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>, one retail investor who lost a substantial amount when the algorithmic stablecoin collapsed told me, he didnt really get it but thought it was too big to collapse overnight.<\/span><span style=\"font-weight: 400\"><\/span><\/p>\n<p><span style=\"font-weight: 400\">On the other hand, some funds that<\/span> <span style=\"font-weight: 400\">trade<\/span><span style=\"font-weight: 400\"> complex financial products for a living made a killing.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Who did the due diligence? Who said pegging two related coins via complex math was a good idea? Most were just plain confused.<\/span><\/p>\n<p><span style=\"font-weight: 400\">One very senior risk analyst at a crypto VC fund told me he held grave reservations regarding the algorithm stablecoin. But his team was assuaged by the cap table having some big names in crypto capital.<\/span><\/p>\n<p><span style=\"font-weight: 400\">And he actually read LUNAs filings from the United States Securities and Exchange Commission.<\/span><\/p>\n<p><span style=\"font-weight: 400\">VCs look at cap tables and see who else invested. LUNA was widely considered a blue chip by then, leading among crypto analysts and then reputable institutions, such as Three Arrows Capital, Pantera Capital, and Coinbase Ventures. Pantera notably got its LUNA exit timing right, while Three Arrows Capital is in liquidation and has filed for bankruptcy.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Three Arrows Capital bought 10.9M locked LUNA for $559.6m \u2013 it&#039;s now worth $670.45.<\/p>\n<p>Ouch<\/p>\n<p>\u2014 Crypto Maxi (@cryptoMaxi420) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/cryptoMaxi420\/status\/1536782495332683783?ref_src=twsrc%5Etfw\">June 14, 2022<\/a><\/p>\n<\/blockquote>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><span style=\"font-weight: 400\">Everyone wants to be the smartest guy in the room. With the LUNA example, VC backers must be seeing something you dont, was the thought, according to that risk analyst.<\/span><\/p>\n<p><span style=\"font-weight: 400\">It always was a Ponzi, no point mincing words, he tells Magazine.<\/span><\/p>\n<p><span style=\"font-weight: 400\">He argues that VCs can distort everything, even in who supports what L1 chains. Its a PR war; VCs turbocharge the machine. I call it the VC hunger games.<\/span><\/p>\n<p><span style=\"font-weight: 400\">This is one high-profile example of the perils of VC funding for crypto communities.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"What_is_a_crypto_VC_anyway\"><\/span>What is a crypto VC anyway?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400\">There is a difference between VCs and the retail investor community, and Web3 blurs the lines. Traditional VC fund managers often push for large capital deployment, a board seat, rapid growth and expedited exits. But Web3 VCs are often early investors who first engage as active community members, providing liquidity and governance to build out a project.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Community itself is a vexed concept, as participants can literally sell out, and institutions are part of the community too, having been involved from early on. Ethereum had 3,000-odd participants, a mix of individuals and institutions.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<figure style=\"width: 608px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" class=\"\" src=\"https:\/\/pbs.twimg.com\/media\/FSdx3kcUUAAbcBt.png\" width=\"608\" height=\"342\" \/><figcaption class=\"wp-caption-text\"><em>Squid Games memes emerged quickly after the LUNA collapse, as its founder Do Kwon is South Korean. Source: Twitter<\/em><\/figcaption><\/figure>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><span style=\"font-weight: 400\">First, we need to understand who VCs are and where they come from, which will help us understand the dilemma of building an organic Web3 community.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The first crypto native funds emerged from investors who got lucky and made a killing on early crypto projects and were suddenly flush with cash. Many had worked on exchanges in the early days and, consequently, were on first-name terms with every token project that tried to get listed. So, they know pretty much everyone in the ecosystem and usually get the first bite at the early funding rounds of any decent project trying to raise capital.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Coinbase<\/span><span style=\"font-weight: 400\">, Ethereum, Consensys and others produced some extremely wealthy individuals who went on to become investors in many projects. Some launched<\/span> <span style=\"font-weight: 400\">their own<\/span><span style=\"font-weight: 400\"> VC funds or firms, while others have stayed low-key to investing. But<\/span> <span style=\"font-weight: 400\">they all know each other<\/span><span style=\"font-weight: 400\">, so they can get early access to deals.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Many exchanges also established incubators or accelerators, such as Binance Labs and Huobi, that incubate super early projects and take a percentage of tokens for funding. They can leverage their network for funding and promises of support, such as listing on their exchanges and social media help.<\/span><\/p>\n<p><span style=\"font-weight: 400\">More recently, individuals have pooled capital to become institutional investors  e.g., coordinated capital investing through investment DAOs. Legally pooled funds management and taxation laws generally lead to these conversations around creating a DAO and\/or legal investment vehicle structure.<\/span><\/p>\n<p><span style=\"font-weight: 400\">So, Web3 VC firms now include a spectrum from 20-something degens who have established their own funds, <\/span><span style=\"font-weight: 400\">electricians mining Bitcoin since 2013 to Softbank. <\/span><span style=\"font-weight: 400\"><br \/><\/span><span style=\"font-weight: 400\"><br \/><\/span><span style=\"font-weight: 400\">Mark Lurie, <\/span><span style=\"font-weight: 400\">a VC turned Web3 founder, <\/span><span style=\"font-weight: 400\">says:<\/span><\/p>\n<p>What do we even mean by community versus a VC firm? People love a villain and hate the man, but at the end of the day, they are all just people. VC in Web3 is a messy, amorphous concept in Web3. Is a group of 20-year-olds with a website an entity, a VC firm, or is that just a bunch of 20-year-olds? VCs also could just be a few whales.<\/p>\n<p><span style=\"font-weight: 400\">Yet, there is always a trade-off between an organic community and exit horizons when dealing with tradable liquid tokens.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">wild chart <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/t.co\/g0xbkWjgCy\">pic.twitter.com\/g0xbkWjgCy<\/a><\/p>\n<p>\u2014 Turner Novak  (@TurnerNovak) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/TurnerNovak\/status\/1534312657506951172?ref_src=twsrc%5Etfw\">June 7, 2022<\/a><\/p>\n<\/blockquote>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Crypto_VC_firm_to_a_hedge_fund_is_a_continuum\"><\/span>Crypto VC firm to a hedge fund is a continuum<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400\">As liquidity is a key aspect of crypto investing, exit time preferences constantly vary compared to traditional VC investments. Liquidity refers to the ease with which an asset or security can be converted into cash at market price.<\/span><\/p>\n<p><span style=\"font-weight: 400\">One of the clearest ways in which VC interests collide with the communitys is in token lockups.<\/span><\/p>\n<p><span style=\"font-weight: 400\">VCs often buy a huge chunk of tokens at an early stage at a very low price, and these tokens are often time-locked, so they cant be sold for one or two years. When the time is up, VCs face the dilemma of dumping their tokens  which makes them a fortune but tanks the price of the communitys holdings  or hanging on. Typically, VCs are perceived to choose the former.<\/span><span style=\"font-weight: 400\"><br \/><\/span><span style=\"font-weight: 400\"><br \/><\/span><span style=\"font-weight: 400\">Lurie thinks the crypto community should create VC review systems for better community building. The community is aware of the quick flip. On-chain vesting is the only thing holding VCs to that vesting schedule, he says.<\/span><\/p>\n<blockquote class=\"pullquote align-center\"><p><span style=\"font-weight: 400\">I wish they could rank VC firms by whether they engaged in quick flips  so founders are aware if they are really dealing with a VC or more of a hedge fund.<\/span><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400\">The capital cycle is different in Web3 compared to traditional VC. Bear and bull cycles also mean that cash preservation can distort investor markets. Exits may need to be expedited in a bear market.<\/span><\/p>\n<p><span style=\"font-weight: 400\">VCs may face conflicts between their own cash position and helping an invested company. Web3 lock-ups of a year or so, for example, are famously shorter than in the traditional VC realm, of, say, seven years.<\/span><\/p>\n<p><span style=\"font-weight: 400\"><\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<figure id=\"attachment_12581\" aria-describedby=\"caption-attachment-12581\" style=\"width: 600px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-12581\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/a16z-twitter.jpg\" alt=\"a16z\" width=\"600\" height=\"300\" \/><figcaption id=\"caption-attachment-12581\" class=\"wp-caption-text\"><em>a16z has provided VC funding to everyone who is anyone in crypto. Source: a16z<\/em><\/figcaption><\/figure>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>Staking (especially in a bull market) may attract VC funding away from riskier seed VC plays. Staking a retail investment once a token lists on a retail exchange can provide better cash returns than a cheap seed deal pre-token launch, locked up for 12 months, that tanks when it lists as a token.<span style=\"font-weight: 400\"><br \/><\/span><\/p>\n<p><span style=\"font-weight: 400\">Crypto VC firms invest at various stages and, at times, act like crypto hedge funds. <\/span><span style=\"font-weight: 400\">Venture capital invests in startups to accelerate their growth and generate high returns for investors. Hedge funds traditionally invest in a variety of investments, ranging from stocks, bonds, commodities and currencies using complex structures and leveraging in order to boost returns more rapidly.<\/span><\/p>\n<p><span style=\"font-weight: 400\">David Mack, managing director of Koji Capital, tells Magazine, its a <\/span><span style=\"font-weight: 400\">continuum:<\/span><\/p>\n<blockquote class=\"pullquote align-center\"><p><span style=\"font-weight: 400\">Crypto VCs are effectively hybrids: When teams are raising seed capital to get resourced to deliver a product, our <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roach is the same as most venture investors. However, when we realize our investment and hold liquid crypto assets, we start to resemble a hedge fund, often using that liquidity to support the early product we invested in.<\/span><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400\">This kind of approach is an emergent feature of crypto-focused firms, and founders are really in search of this capability when selecting their investors, says Mack.<\/span><i><\/i><\/p>\n<p><span style=\"font-weight: 400\">If assets are tokenized and liquid, then VCs become hedge funds in the long run. A shift to tokenization, from passive to active assets, is more like hedge fund activities. This can create enduring conflict.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<figure id=\"attachment_12575\" aria-describedby=\"caption-attachment-12575\" style=\"width: 600px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-12575\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/vc2.jpg\" alt=\"VC\" width=\"600\" height=\"400\" \/><figcaption id=\"caption-attachment-12575\" class=\"wp-caption-text\"><em>When VC bets pay off, they pay off big time.<\/em><\/figcaption><\/figure>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Liquidity_vs_long-term_community_building\"><\/span>Liquidity vs. long-term community building<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400\">There is a massive conflict between VC liquidity and long-term community building, opines <\/span><span style=\"font-weight: 400\">Jonathan Allen, who started his first VC fund out of college. He now runs<\/span> <span style=\"font-weight: 400\">Mirana Ventures<\/span><span style=\"font-weight: 400\">, is a core contributor to<\/span> <span style=\"font-weight: 400\">BitDAO<\/span><span style=\"font-weight: 400\">,<\/span> <span style=\"font-weight: 400\">zkDAO and<\/span><span style=\"font-weight: 400\">eduDAO,<\/span><span style=\"font-weight: 400\"> and sits on the<\/span> <span style=\"font-weight: 400\">PleasrDAO<\/span><span style=\"font-weight: 400\"> board.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Liquidity allows VCs to think about short-term profits in conflict with communities building for the long term.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Liquidity raises a bunch of new issues. Quality communities mean people who are there for the long haul. We have barely scratched the surface of a healthy community that incentivises better community members, argues Allen.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Allen was also a U.S. Army <\/span><span style=\"font-weight: 400\">Explosive Ordnance Disposal (EOD) <\/span><span style=\"font-weight: 400\">Technician (bomb disarmer) who got into crypto after an injury suffered in Afghanistan in 2012. T<\/span><span style=\"font-weight: 400\">he EOD motto is perhaps suited to being a crypto VC, too: Initial success or total failure.<\/span><\/p>\n<p><span style=\"font-weight: 400\">He argues that crypto VC has evolved over cycles  with increasing community exposure and less VC funding now favored. <\/span><span style=\"font-weight: 400\">The alternative is fair distributions of tokens to the most active community members and project users to ensure the most valuable people to the project are motivated by the correct incentives.<\/span><\/p>\n<blockquote class=\"pullquote align-center\"><p>We dont want a lot of VCs to own a lot of tokens. A lot of VC funds are maybe not as helpful as individuals or communities. We often advise our portfolio companies to save 30% for angels. Individuals who we feel need to, and can be, more helpful.<\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400\">Angels are typically the investors who first write a small cheque in return for equity when the company is at a very early stage and the companys valuation is still low.<\/span><\/p>\n<p><span style=\"font-weight: 400\">While the exit cycles in crypto are a key difference from traditional VC, founders can also determine the lock-ups so good-faith investors cannot dump their profits.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Nonetheless, for Allen, community building is key. With a lot of invested projects, we let the code stand for itself, he says. Its about building authentic community missionaries versus mercenaries  first movers at scale. VC funding in the form of blitzscaling can grow the wrong kind of community.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Too often, people are free riders  they hold tokens and dont do anything.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<div class=\"jeg_postblock_carousel jeg_postblock_carousel_3 jeg_postblock jeg_col_8 jnews_module__0_62c84097036bf    \">\n<div class=\"jeg_carousel_post\" data-nav='' data-autoplay='true' data-delay='4500' data-items=\"3\" data-margin='20'>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Australia&#039;s crypto\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Australias-crypto-law-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Australias-crypto-law-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Australias-crypto-law-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Australias-crypto-law-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Australias_world-leading_crypto_laws_are_at_the_crossroads_The_inside_story\"><\/span>Australias world-leading crypto laws are at the crossroads: The inside story<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> July 6, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Cryptopia\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Kyle-Chasse-and-crypto-utopia-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Kyle-Chasse-and-crypto-utopia-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Kyle-Chasse-and-crypto-utopia-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Kyle-Chasse-and-crypto-utopia-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Thailands_Crypto_Utopia_90_of_a_cult_without_all_the_weird_stuff\"><\/span>Thailands Crypto Utopia  90% of a cult, without all the weird stuff<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> June 30, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Old School Photographers\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-NFTs-and-photographers-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-NFTs-and-photographers-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-NFTs-and-photographers-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-NFTs-and-photographers-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Old-school_photographers_grapple_with_NFTs_New_world_new_rules\"><\/span>Old-school photographers grapple with NFTs: New world, new rules<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> June 23, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Celsius\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Accredited-investor-laws-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Accredited-investor-laws-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Accredited-investor-laws-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Accredited-investor-laws-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Risky_business_Celsius_crisis_and_the_hated_accredited_investor_laws\"><\/span>Risky business: Celsius crisis and the hated accredited investor laws<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> June 21, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Soulbound Tokens\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Soulbound-Tokens-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Soulbound-Tokens-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Soulbound-Tokens-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Soulbound-Tokens-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Soulbound_Tokens_Social_credit_system_or_spark_for_global_adoption\"><\/span>Soulbound Tokens: Social credit system or spark for global adoption?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> June 16, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div><\/div>\n<\/p><\/div>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h4><span class=\"ez-toc-section\" id=\"VCs_add_investor_network_effects_and_tokenomics_advice\"><\/span>VCs add investor network effects and tokenomics advice<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400\">While theres certainly an increasing hostility to VCs in the industry, some founders reject this angst.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Josh Tobkin dropped out of a large economics scholarship to play professional poker and learned to think in probabilities. By the last crypto winter of 2018, he had founded Unity Chain, a crypto lab in Taiwan. He has some well-known investors, including FTX, United Overseas Bank, Coinbase and Razer.<\/span><\/p>\n<p><span style=\"font-weight: 400\">He is now working on a novel blockchain consensus algorithm: the creation of an intralayer that bridges all layer 1s, layer 2s and decentralized apps across all ecosystems.<\/span> <span style=\"font-weight: 400\">A more secure infrastructure to prevent instances like the Ronin Bridge hack or the liveness faults of Solana. His current project, <\/span><span style=\"font-weight: 400\">SupraOracles<\/span><span style=\"font-weight: 400\">, plans to have a token, with the infrastructure launching soon.<\/span><\/p>\n<p><span style=\"font-weight: 400\">He believes a VC lead investor adds great value, as the complication is taking a check from everyone. VCs make it much easier to close deals both with other investors as well as social proofing for large corporate partners.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Tobkin tells Magazine, Decentralized retail raises are great, but it helps to find (VC) funds who are passionate about your project when it aids their entire portfolio. Projects need a mixture of both types of funding for their growth whilst balancing decentralization.<\/span><\/p>\n<blockquote class=\"pullquote align-center\"><p>Never go full VC, and never go full retail.<\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400\">Tobkin says VCs played an important role in SupraOracles: VCs were necessary to get started. The cap table [table of investors] amounts are very balanced. We didnt oversell. 1% max for each investor on strict vesting terms. <\/span><span style=\"font-weight: 400\">Vesting refers to when equity can be cashed out.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Tobkin also values the Web2 introductions that more traditional VCs can offer. <\/span><span style=\"font-weight: 400\"><br \/><\/span><span style=\"font-weight: 400\"><br \/><\/span><span style=\"font-weight: 400\">Crucially, the leads for our rounds have worked for it. They have a massive list of traditional Web2 in need of our exact solution, and they are making introductions. They sell for us  its a win-win. Retail generally cant do that unfortunately.<\/span><\/p>\n<p>With one integration, were bridging Web2 to Web3 and vice versa. We have VCs to thank for it.<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Are you a traditional VC who wants to enter into Crypto VC? or a founder who wants to study thought patterns of VCs?<\/p>\n<p>Here are 14 great threads on Crypto VC that will explain you the whole crypto VC landscape and what daily life looks like as a crypto VC  <\/p>\n<p>+ some alpha..<\/p>\n<p>\u2014 Meet Barvadiya (@meetbarvadiya) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/meetbarvadiya\/status\/1538624564627812354?ref_src=twsrc%5Etfw\">June 19, 2022<\/a><\/p>\n<\/blockquote>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Wen_token_sale\"><\/span>Wen token sale?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400\">Tara Fung i<\/span><span style=\"font-weight: 400\">s another Web3 founder grateful for VCs. She is a<\/span> <span style=\"font-weight: 400\">Harvard graduate who transitioned to tech with <\/span><span style=\"font-weight: 400\">finance skills <\/span><span style=\"font-weight: 400\">and a general curiosity.<\/span><span style=\"font-weight: 400\">A former chief revenue officer at two centralized fintechs, she wanted to build on the new frontier. Her startup, <\/span><span style=\"font-weight: 400\">Co:Create,<\/span><span style=\"font-weight: 400\"> seeks to help successful NFT projects scale.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Becoming a founder in 2022, she received $25 million in VC funding led by a16z. Her thinking was that the resources would help us deliver faster, and I could focus on building (as I was) feeling like this would be a rocky year.<\/span><\/p>\n<p><span style=\"font-weight: 400\">A16z <\/span><span style=\"font-weight: 400\">closed a $4.5-billion crypto fund<\/span><span style=\"font-weight: 400\"> in May 2022 despite treacherous market conditions. <\/span><span style=\"font-weight: 400\">She met a16z partner Chris Dixon four times before meeting the other partners. She notes theres not a ton of diligence at seed. Its a diverse cap table, and obviously, the fundraising timeline sped up due to a16zs participation. She also hand-selected Web3 native angels to be included on the cap table.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>(function() {window.mc4wp = window.mc4wp || {listeners: [],forms: {on: function(evt, cb) {window.mc4wp.listeners.push({event   : evt,callback: cb});}}}})();<!-- Mailchimp for WordPress v4.8.7 - https:\/\/wordpress.org\/plugins\/mailchimp-for-wp\/ --><\/p>\n<div class=\"mc4wp-form-fields\">\n<div class=\"jeg_mc4wp_heading\">\n<h3><span class=\"ez-toc-section\" id=\"The_best_of_blockchain_every_Tuesday\"><\/span>The best of blockchain, every Tuesday<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>  Subscribe for thoughtful explorations and leisurely reads from Magazine.<\/p>\n<\/div>\n<p>By subscribing you agree to our Terms of Service and Privacy Policy<\/div>\n<p><label>Leave this field empty if you&#8217;re human: <\/label><\/p>\n<div class=\"mc4wp-response\"><\/div>\n<p><!-- \/ Mailchimp for WordPress Plugin --><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><span style=\"font-weight: 400\">She highly values that a16z has an in-house research team that I can go to with a problem, such as best practice for tokenomic design. Thats a huge value add. Tokenomic design is an emerging, complex and sometimes arbitrary <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/sciencee\/\" data-internallinksmanager029f6b8e52c=\"5\" title=\"Science\" target=\"_blank\" rel=\"noopener\">science<\/a>. <\/span><\/p>\n<p><span style=\"font-weight: 400\">This is an important theme. How the companies are structured early on has important ramifications. What we do now can set us up for success  VCs offer a level of professionalism.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Token sales too early can be a double-edged sword. Fung explains that one challenging aspect of building in Web3 is that founders must build publicly, not behind closed doors.<\/span><\/p>\n<p><span style=\"font-weight: 400\">When and if to form a DAO is now another vexed question alongside wen to have a token sale?<\/span><\/p>\n<p><span style=\"font-weight: 400\">DAOs offer great promise, but what does the timeline look like? You have to be thoughtful and create clarity at the start and let the community evolve.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<figure id=\"attachment_12574\" aria-describedby=\"caption-attachment-12574\" style=\"width: 603px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-12574\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/vc3-1024x682.jpg\" alt=\"Building\" width=\"603\" height=\"402\" \/><figcaption id=\"caption-attachment-12574\" class=\"wp-caption-text\"><em>VCs can actually be quite helpful in building a community, too.<\/em><\/figcaption><\/figure>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Investor_protections\"><\/span>Investor protections<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400\">Lurie<\/span><span style=\"font-weight: 400\">, founder <\/span><span style=\"font-weight: 400\">of <\/span><span style=\"font-weight: 400\">Shipyard Software<\/span><span style=\"font-weight: 400\">, <\/span><span style=\"font-weight: 400\">agrees that VCs can work hand in hand with decentralized governance and bring major benefits to the community.<\/span><span style=\"font-weight: 400\"> He argues that in crypto, its necessary to decentralize governance because the community demands it. It is also a necessity to make the VC model work.<\/span><span style=\"font-weight: 400\"> VC funding is a competitive and a regulatory necessity to building a viable company, argues Lurie.<\/span><\/p>\n<p><span style=\"font-weight: 400\">To me, a defining characteristic of a VC firm is that it steps up to ensure investor protections and good governance, says Lurie.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Lurie started out at VC Bessemer Venture Partners, and he has seen both sides of the VC spectrum, raising several VC rounds, some hard, some easy, for his startups. This includes an early NFT protocol ICO in 2017.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Decentralized governance is a trade-off with nimbleness. Its tough to start a fully decentralized company from day one. You need to strike a balance. Startups are in a constant battle, and few people make it to the end of that journey.<\/span><\/p>\n<p><span style=\"font-weight: 400\">One of the best reasons for VC-backing is governance  a partner on a deal will hold founders accountable, he says.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Are_faceless_DAOs_not_accountable_to_investors\"><\/span>Are faceless DAOs not accountable to investors?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400\">Weve noted how a VCs interests can work against those of the community, but sometimes, the community can work against the interests of VCs. And communities can vote in a way that totally disregards the law or their obligations.<\/span><span style=\"font-weight: 400\"> In mid-June, <\/span><span style=\"font-weight: 400\">Merit Circle DAO<\/span><span style=\"font-weight: 400\">, a gaming DAO, voted to return the investment of a major play-to-earn guild turned early-stage investor Yield Guild Games (YGG)<\/span> <span style=\"font-weight: 400\">instead of paying out the 30x return it was owed.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">It&#039;s sort of funny how deeply this whole web3 thing set the hook with VCs.<\/p>\n<p>They&#039;re squirming a little bit now  lashing out at skeptics in a way usually reserved for CEOs of fraudulent companies.<\/p>\n<p>How did we get here?<br \/>1\/<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/t.co\/Tj3OtUUl3J\">https:\/\/t.co\/Tj3OtUUl3J<\/a><\/p>\n<p>\u2014 Travis.web1 (@coloradotravis) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/coloradotravis\/status\/1534160515966160896?ref_src=twsrc%5Etfw\">June 7, 2022<\/a><\/p>\n<\/blockquote>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><span style=\"font-weight: 400\">What will this mean for VC investing in DAOs in the future if the community can simply overturn a contractual agreement with a vote? Whod stump up the funds in the first place?<\/span><\/p>\n<p><span style=\"font-weight: 400\">As it happened, a reasonable deal was hammered out whereby YGG got a 10x return instantly, with no more vesting or risk of a lowered valuation. But it highlights that there are perils, too, for VC investors with the evolving and sometimes flaky nature of crypto communities.<\/span><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">If a DAO successfully renegs on a SAFT, it will embolden other DAOs to do the same resulting in greater levels of politics and a chilling effect on future investments into DAOs.<\/p>\n<p>\u2014 Galois Capital (@Galois_Capital) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/Galois_Capital\/status\/1529689628025970688?ref_src=twsrc%5Etfw\">May 26, 2022<\/a><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400\"><\/span><\/p>\n<p>\u00a0<\/p>\n<div class=\"jeg_postblock_carousel jeg_postblock_carousel_3 jeg_postblock jeg_col_8 jnews_module__1_62c8409709b70    \">\n<div class=\"jeg_carousel_post\" data-nav='' data-autoplay='true' data-delay='4500' data-items=\"3\" data-margin='20'>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Australia&#039;s crypto\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Australias-crypto-law-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Australias-crypto-law-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Australias-crypto-law-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Australias-crypto-law-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Australias_world-leading_crypto_laws_are_at_the_crossroads_The_inside_story-2\"><\/span>Australias world-leading crypto laws are at the crossroads: The inside story<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> July 6, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Cryptopia\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Kyle-Chasse-and-crypto-utopia-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Kyle-Chasse-and-crypto-utopia-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Kyle-Chasse-and-crypto-utopia-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Kyle-Chasse-and-crypto-utopia-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Thailands_Crypto_Utopia_90_of_a_cult_without_all_the_weird_stuff-2\"><\/span>Thailands Crypto Utopia  90% of a cult, without all the weird stuff<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> June 30, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Old School Photographers\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-NFTs-and-photographers-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-NFTs-and-photographers-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-NFTs-and-photographers-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-NFTs-and-photographers-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Old-school_photographers_grapple_with_NFTs_New_world_new_rules-2\"><\/span>Old-school photographers grapple with NFTs: New world, new rules<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> June 23, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Celsius\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Accredited-investor-laws-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Accredited-investor-laws-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Accredited-investor-laws-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Accredited-investor-laws-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Risky_business_Celsius_crisis_and_the_hated_accredited_investor_laws-2\"><\/span>Risky business: Celsius crisis and the hated accredited investor laws<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> June 21, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div>\n<div class=\"jeg_post_wrapper\">\n<article class=\"jeg_post format-standard\">\n<div class=\"jeg_thumb\">\n<div class=\"thumbnail-container animate-lazy  size-1000 \"><img decoding=\"async\" width=\"75\" height=\"75\" src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/themes\/jnews\/assets\/img\/jeg-empty.png\" class=\"attachment-jnews-75x75 size-jnews-75x75 lazyload wp-post-image\" alt=\"Soulbound Tokens\" loading=\"lazy\" data-src=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Soulbound-Tokens-75x75.jpg\" data-srcset=\"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Soulbound-Tokens-75x75.jpg 75w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Soulbound-Tokens-100x100.jpg 100w, https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/06\/magazine-Soulbound-Tokens-350x350.jpg 350w\" data-sizes=\"auto\" data-expand=\"700\" \/><\/div>\n<\/p><\/div>\n<div class=\"overlay_content\">\n<div class=\"jeg_postblock_content\">\n<h3 class=\"jeg_post_title\"><span class=\"ez-toc-section\" id=\"Soulbound_Tokens_Social_credit_system_or_spark_for_global_adoption-2\"><\/span>Soulbound Tokens: Social credit system or spark for global adoption?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"jeg_post_meta\">\n<div class=\"jeg_meta_date\"><i class=\"fa fa-clock-o\"><\/i> June 16, 2022<\/div>\n<\/div><\/div>\n<\/p><\/div>\n<\/article>\n<\/div><\/div>\n<\/p><\/div>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/magazine\/2022\/07\/08\/risks-benefits-venture-capital-funds-crypto-communities\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;The risks and benefits of VCs for crypto communities&#8221; &lt;p&gt;&lt;strong&gt;Traditional venture capital funds drive valuations through multiple funding rounds. Startups aim for initial public offerings or other exits. Then the sharemarket decides upon a more realistic valuation.&lt;\/strong&gt; But in cryptoland, tokens introduce market capitalization while a company is being built. This means there are a&#8230;<\/p>\n","protected":false},"author":1,"featured_media":471958,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/cointelegraph.com\/magazine\/wp-content\/uploads\/2022\/07\/magazine-Perils-of-VC-funding-for-crypto-community-building.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-471957","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/471957","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=471957"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/471957\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/471958"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=471957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=471957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=471957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}