We need to talk about liquidity.
I honestly can’t stop thinking about this. This checks out with so much of what I have seen of VCs, angels, and dedicated crypto investment funds over the last year. 1/
I honestly can’t stop thinking about this. This checks out with so much of what I have seen of VCs, angels, and dedicated crypto investment funds over the last year. 1/
Founders can no longer think of their investors as they traditionally would—tokens become liquid earlier in the life cycle of a project than in traditional startups so investors are not necessarily there for the long haul. 2/
Long term incentive alignment (or lack thereof) between founders, their early investors, and their eventual users remains seriously out of whack for any project creating a token. 3/
The silver lining is that in this market capital is the cheapest thing around. This means that founders have a high degree of discretion about who they partner with early. 4/
Founders need to look for backers and real value-adds, not the pumpers, dumpers, and insider traders. Unfortunately even some of the most prominent investors fall into the latter categories. 5/
There is a lot of hate on cryptocurrency advisors. I admit, whenever I have to introduce myself as an advisor / consultant I cringe a bit.
But there’s also a reason why advisors proliferate in this space. Advisors are filling a hole left by VCs. 6/
But there’s also a reason why advisors proliferate in this space. Advisors are filling a hole left by VCs. 6/
Investors, motivated by shorter term gains in more liquid markets, have different incentives from their portfolio projects, making them harder to rely on for longer term support. 7/
Granted, this doesn’t at all apply to all crypto investors. There are plenty of incredible value-adds out there among the women and men angel investing and running funds. 9/
This whole dynamic is also part of why we have started to see a shift back toward equity-driven fundraises. 10/
Incentives matter. The early liquidity that tokens provide changes incentives. Take this into account when you are talking to or taking advice from token investors. /End
