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The renowned blockchain entrepreneur and investor summarizes his thoughts on the incentives for capital formation in crypto, the natural competition between VCs and retail investors, the indicators that are always attractive to early round participants, and the tough times for early stage fundraisers.
Teams are limited by the dominant meta, Kain Warwick admits
In 2024, even the most successful Web 3.0 teams seeking fresh funding are limited by the current meta if they want to raise large funds, Warwick shared in his latest thread on X with 123,000 followers.
From the perspective of early investors, the project’s attractiveness signals – in terms of user base, potential customers, airdrop farmers – remain unchanged: VCs look for products with a steadily increasing TVL, a large number of X and Telegram followers, and so on.
Despite this, investors still use these primitive indicators of social engagement to calculate the potential number of retail token buyers.
Therefore, introducing points, pioneered by Blast, L2’s overblown OP Stack, became a natural way for teams to prepare for fundraising:
So when a meta point comes up, everyone has to do it. Because competition in the initial stages of salary increases is very tight. If you can incentivize activity and TVL without costs, you can raise larger funds
Seed rounds completed at $10 million-$50 million in FDV were “pure hands” for investors, and almost every one of them turned a profit in the end, Warwick acknowledged.
Crypto fundraising 101 by the founder of Synthetix
Personally, he recommends disclosing the token to retail at a $10M-$1B valuation after three rounds of private/seed funding with VCs:
To break the current anti-retail meta, you have to face the wrath of VCs and regulators. No first time founder would do this. The incentives are too strong. Do a low float token launch after 1-3 private spins and get a paper of 8 to 9 or even 10 networth figs. Or try shifting meta and get rekt most likely
Additionally, he acknowledged the role of retroactive airdrops in 2021-2023 as a way to introduce tokens to the majority of retail owners.
As covered by U.Today previously, Warwick predicted the meme coin euphoria as a natural catalyst for Ethereum’s L2 adoption.