Amidst a market-wide pullback, the Venture Capital (VC) space, much like the startup space, is evolving with changes in technology and approaches to helping companies launch and grow. Over the last five decades, VC investing has been restricted to large institutions and high-net-worth individuals.
Some investors have pulled back in recent years, leading to a surplus of unused capital. CB Insights' State of Venture report for Q1 2024 highlighted a 7-year low in deal-making, marking the eighth consecutive quarter of declining equity deals.
The VC landscape, like any financial market, experiences ebbs and flows. In 2021, startups often raised more than needed, leading to overcapitalization. However, by 2023, there was an undersupply of capital, affecting seed and early-stage startups. This resulted in a slowdown in financing and a reallocation of cash to navigate the challenging market.
Decentralized Startup funding
As startup capital dried up, a vacuum was created in the market. An opportunity to improve the VC model for both investors and founders opened up in the Web3 space. Blockchain technology is revolutionizing the VC space with the creation of Decentralised VCs, which are compelling alternatives to the traditional model.
Blockchain technology significantly reduces the barriers to entry. The process of investing in startups becomes more accessible to a wider range of retail investors. Through tokenization, each investor holds digital tokens that represent ownership or stake in the company. Because the purchase of these tokens is democratized, it can lead to a rise in funding for a wider range of projects. One such decentralized VC is basedVC.
BasedVC: VC Deals For Retail Investors
BasedVC is a venture capital firm that provides retail investors with early-stage Web3 investments. The company utilizes smart contract solutions for token vesting and transfers and allows investors to participate in funding rounds without lengthy KYC procedures.
The decentralized VC is modeled on the knowledge that access is everything when it comes to investing. For years, VC investing has been restricted to high-tower offices owned by high-net-worth individuals, but with Blockchain technology, anyone over 18 can join a community and invest alongside industry VC giants.
Founded by a team of astute professionals including Hubert Krawczyk, Bing Wang, Musthafa Ahmed, and Rudy De La Cruz, the company is backed by industry behemoths including Multicoin Capitals, Binance Labs, Sequoia, Animoca Brands, etc.
How Does basedVC Work
Much like other Decentralized VCs in the crypto space, basedVC works by connecting retail investors with startup projects and private deals. As an all-in-one platform, basedVC boasts of a platform that seamlessly facilitates pooling of funds among communities of investors. This platform is built on Blockchain's automated and immutable technology, a robust legal structure, partnerships, and efficient management of deals. Interestingly, it got $16 million in funding in 2023 when investors closed their shops.
The firm believes in a diverse investment strategy, which allows them to prospect for the next unicorn of Web3. This helps reduce investor risk and allows a wider range of investment choices. The fund focuses on investing in projects building Blockchain infrastructure, Web3 games, DeFi applications, Augmented Reality, Artificial Intelligence, and tokenization and yield from real-world assets. It has invested in companies including Saakuru, Aethir, Metalcore, Goodlawyer, BlockGames, and LandX.
BasedVC's legal structure enables retail investors to join communities and pool capital, overcoming investment barriers and accessing deals typically reserved for larger investors. The firm conducts due diligence, tracks investments, and integrates with the Web3 ecosystem to gamify the investment process.
Final Outlook
Blockchain-based fundraising offers investors and startup founders an alternative way to explore funding and growth. It's only expected that VC models like basedVC will become a prominent driver for early-stage investing, particularly in the Web3 ecosystem.
