Amid 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.
However, some prolific investors have pulled back on investing in the last few years, adopting a wait-and-see approach. The result is a glut of dry powder that has ended up growing into a massive capital gap. A report from CB Insights' State of Venture for the first quarter of 2024 showed that deal-making dropped to a 7-year low in Q1, and was the eighth straight quarter of a drop in equity deal volume.
Like any financial market, the VC landscape is subject to periodic ebbs and flows. In 2021, most startups were able to raise more than required, causing overcapitalization. By 2023, the VC scenery hit an undersupply of capital. The effect reverberates across the startup ecosystem, with both seed and early-stage startups facing a slowdown in financing and a reallocation of available cash to navigate the demanding bear market.
Enter decentralization.
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.
While traditional VC funding has a higher barrier of entry, decentralized VCs leverage the power of community, tokenized ownership, and a transparent and democratized method of investment in early-stage startups. They rely on the application of Blockchain technology in smart contracts, fungible and non-fungible tokens, and DAOs to enable a large number of retail investors to pool funds for investment in projects.
At its core, decentralized venture capital is characterized by accessibility to raise and invest capital; investor protection; liquidity; equitability; and diversity.
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. A new decentralized VC bringing exclusive deals to retail investors.
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 modelled 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. After going through a vetting process, the firm lists early-stage companies on their platform. Then investors may choose from a variety of options to invest in.
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 uses its licensed legal structure to empower retail investors to participate in communities to pool capital. With this, the platform scales the roadblocks to investing and allows investors to gain access to a wide range of deals that are traditionally reserved for the whales. The firm conducts due diligence on projects and tracks investments and token claims for investors. All these are powered by a solid integration with the Web3 ecosystem to gamify the investment process.
BasedVC Features
Like competitors, basedVC offers a wide range of features for both investors and startup founders. They include:
- Advisory services: this includes token offerings, business development, tokenization, and token design for early-stage startups.
- Exclusive deals: basedVC aims to make available to retail investors deals that would normally be reserved for the small group of extremely rich. This is to help level the playing field.
- Digital asset and community management: the firm manages tokens, projects, and the community backing them.
The Future Outlook With basedVC
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.
