On-chain Raises Are The Future Of Startup Funding
On-chain raises are the future of startup funding
Web3, according to Jack Dorsey, is owned by venture capitalists. To that end, web3 is whatever we decide it to be – and that venture capitalists will only be able to own it if we give them permission to do so. We are currently working on web3, and we have the ability to direct where it goes and how it is funded at each stage of the development process."
Because decentralization and autonomy are important concepts to consider, there is no reason why we should continue to adhere to antiquated venture capital practices. Another option is smart contract-controlled blockchain funding. This method is more intuitive for projects to use and is also more equitable and transparent. It is also more adaptable for both investors and developers, making it a better option for both.
This is why fundraising methods that are entirely on-chain are the way of the future in terms of efficiency (or at the very least the next great evolution).
The road was winding and long
Even if venture capitalists are to own web3, let us acknowledge that Web 2.0 is already owned by billionaires, conglomerates, and multinational corporations with cultural clout, political clout, and the most disproportionately distributed wealth distributions in the history of mankind. But here's the rub: almost everything we do online is intended to increase their capital while further entrenching their monopoly. Every time we connect, we are essentially clocking in for the day.
It should come as no surprise that seasoned Web 2.0 players such as Jack Dorsey have expressed skepticism about the future of web3 technologies. Important to remember moving forward is that web3 is a standalone technology that does not replace Web 2.0, and that the sandbox will continue to exist in its current form.
Web3 will exist side by side with Web 2.0 and will be completely independent of it. Unbelievably, some of us believe that taking advantage of this opportunity is an ethical imperative, believing that we must iterate on the Internet's concept, atone for the mistakes of the fathers, and perhaps begin to influence the fundamental way our society functions. To the contrary, we should empower communities rather than business enterprises.
When it comes down to it, web3 is exactly that: an open source way to provide individuals with the same platform that corporations currently control. It is the sole purpose of our new framework to empower individuals while also making it more equitable and accessible to all people, regardless of their age or race. It is also open to people of all nationalities. Because the status quo cannot be overturned on its own, someone has to take the initiative.
It is entirely up to us to determine the course of our lives
What exactly causes this upheaval to take place? In this case, the initialization is done entirely on-chain. The vast majority of developers currently engaged in the development of web3 protocols and decentralized applications are members of a new generation of creators who approach their work from a philosophical point of view.
They are familiar with how older models operate, who they serve, and how they are intended to continue to operate in this manner. Following traditional startup accelerators, where we gained hands-on experience building a company, raising capital, forming a board of directors, and hiring employees, we have a strong foundation on which to build and improve.
Our funding needs can be met in a manner that is directly aligned with the web3 ethos because blockchain technology already provides us with open source, immutable ledgers that we can use to facilitate all of our funding needs. By utilizing self-executing smart contracts, we can control the opening and closing dates of a raise, as well as make all investments and their terms open and verifiable to anyone who wishes to view them.
Transparency is critical for any web3 project worth its salt, and by utilizing these on-chain, publicly verifiable fundraising methods we can ensure that there is no favoritism on the part of the project. Because everything is transparent and everyone can see that all investors are on an equal footing, this model eliminates the possibility of backroom deals. Even better, each time an investment is confirmed on the blockchain, the share deals and structure of the investment are made publicly available for inspection.
Using whitelisting, we can ensure that those who are truly invested in a project and are actively involved in the space have the most economic clout.
Due diligence and vetting can be completed in advance by pre-selecting crypto addresses, allowing the process to be streamlined. Because funding contracts are generic and can whitelist any address for any reason, the team issuing the smart contract retains complete control over the funding contract's distribution. This is fine-grained control over a process that is typically messy and time-consuming.
Origins with a conscience
Additionally, on-chain funding models are more equitable for developers, as they enable them to overcome certain socioeconomic barriers such as education, employment, credit, and connections that may otherwise prevent them from entering the market. Because of these models, developers can launch their projects even if they only have the project they are currently working on. The framework as a whole encourages a more meritocratic mode of operation, in which the project and its potential take precedence over all other considerations.
In the traditional sense, smaller projects can save money and time by not having to develop a pitch deck, open a bank account, or actively seek out investors.
This is the kind of community-driven spirit that gave birth to the blockchain technology industry in the first place. This will allow developers, enthusiasts, and users to take ownership of web3 by putting in place simple tools to facilitate growth and funding in a manner that is appropriate for each project.
And there's more to come in the future
It is not intended that on-chain raises completely replace the traditional venture capital model; after all, collaborating with sophisticated investors provides builders with valuable perspectives. Investment bankers and venture capitalists are highly skilled at analyzing business and financial models and forecasting future growth. They also assess execution risk and determine a company's market position. Venture capitalists who place a high value on these characteristics will continue to be as valuable in the future as they currently are. Every project desires and necessitates the involvement of individuals who have a proven track record of assisting companies in their growth and success.
As a solution, on-chain funding is not a panacea; rather, it is simply the best framework we have at this time for aligning funding processes with the mechanisms developers find most useful while still maintaining an open and equitable process.
We should pay close attention to these new innovations and embrace them because they will help us to realize the full potential of the new Internet to its fullest extent possible.
