VC FUNDING
PROS AND CONS OF VC FUNDING
DATED: DECEMBER 18, 2022
This paper is specifically written for the purpose of latest trends as of today for VC Funding. Now, the blockchain/crypto trends have been changed in the last few weeks, and we will define them in conclusion with the latest practical examples
PROS:
- LARGE amount of funding can be arranged (raised)
- Assistance with hiring and building a team is provided by VC
- Collaboration opportunities with industry experts
- Networking opportunities and help forraising FUTURE rounds from other VCs
- INCREASED publicity and exposure of the project
CONS:
- Founders’ equity will be heavily reduced if the revenue model is not practical
- Funding decision is very rare as multiple projects, and very hard to obtain
- Extensive Due Diligence process with long period of time requirement
- Multiple Due Diligence meetings with current cofounders and team
- High expectation by VCs for RAPID growth of project’s business
- Funds are NOW released on a performance schedule (not instantly)
- Underperformers can LOSE their business easily
There are always the advantages and disadvantages of any fund-raising model, but the main point that should be considered by any of the project or its cofounders, should be the CONTROL and ACCESS to the project. Volume based community-funded projects have been relatively growing more as compared to VC funded. Other major disadvantage is the share or equity to the under-trust VC who can sell or threaten to sell its portion of project share at any point of time, and it can damage the project reputation drastically and rapidly (FTX / Binance Collapse, MANIPULATED). Now, the VC funding trends have been changed with minimized investment (to be released) AND to the performance-based projects.
Let us create VALUATION of our own project with community-based funding through volume of users / contributors and after reaching a certain decent REVENUE model, KOOP360 will go to the VCs for Series A / B funding (not seed) at lower equity share to be offered at a higher ticket / fund size.
