Thread by @Justin_Bons

1/14) We need to bring ICOs back!

Fundraising in crypto used to be democratized; anyone could participate on equal terms

Now, the market is dominated by predatory VCs instead!

The culprit; regulators made ICOs illegal, as this gave the entire early-stage market over to VCs: 🧵

2/14) It is a dirty game that is being played

VCs get in on the pre-pre-pre-sale at discounted prices, only to sell into retail at inflated prices

Why do we not allow anyone to participate on the ground floor?

This is where accredited investor laws come in to "protect" retail:

3/14) Such as the requirement for an onerous amount of KYC & AML

So difficult that it often requires lawyers & accountants on payroll

A minimum investment amount is also often required of $100k!

This effectively puts these opportunities out of reach of retail/poor investors

4/14) So, the same state that allows poor people to buy lottery tickets

Does not allow them to participate in the highest-return investments

That is a seriously messed up situation

As it turned the crypto market into the same type of VC boys club we see in equity markets today

5/14) ICOs have the potential to democratize investment for all!

All we have to do is convince regulators to stop putting founders in jail for allowing retail to participate on a level playing field

As banning participation only leads to exploitation of retail at a later stage!

6/14) People forget that ETH & most major DeFi blue chips owe their origin to past ICOs

The ICO model proved to be successful

Only abandoned due to the regulatory pressure & very few are in a position to speak up against VC funding

That is how VCs came to dominate crypto today

7/14) There is also an inherent conflict between crypto tokens & crypto equity

Where both exist for a project, there is a battle over revenue flows

That is where rent-seeking by VCs can also take place

As they prioritize equity revenue, thereby also weakening token economics

8/14) I run a fund myself; @cybercapital is registered with the financial authorities in the Netherlands

So we have the same onerous requirements that disallow us from serving the poor

However, we are not VCs, which explains how I can speak out against the current status quo

9/14) Instead we apply deep research & invest directly into liquid tokens

Something that is accessible to retail investors

Even if they do not have a large full-time research team like @cybercapital

The concentration risk also ends up lower with an ICO, protecting investors!

10/14) There is another factor that explains the popularity of crypto VCs:

It is a recognizable structure by the trade-fi types

My fund directly invests in decentralized crypto tokens

This is a very different proposition from taking a shotgun approach with early-stage equity

11/14) One is crypto-native & the other is compatible with trade-fi

This can be frustrating from my perspective; as VC investments often make little sense

Investing in nonsense & lacking a consistent crypto investment thesis

However, the shotgun approach is what makes it work

12/14) I am not against VCs; they do play an important role in funding early-stage projects

However, it is regulation that has artificially pushed the prominence of VCs to unhealthy levels

While simultaneously disenfranchising retail investors from the greatest opportunities!

13/14) ICOs instead provide everyone an investment vehicle that is entirely transparent & open

Where the only difference between a large fund & a retail investor is knowledge

Not a 100x discount over retail investors...

That is what makes the ICO model so much fairer & safer!

14/14) There were many scams & abuses with ICOs

However, that was still better than what we have now:

Elitist VCs own the majority of all new chains supply at a discount; that is now the norm!

For an industry that prides itself on financial inclusion, we can do so much better!