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:

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:

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
CONCLUSION:

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.

SUGGESTION:

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.

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