BasedVC is Giving Communities a Chance To Invest Like VCs

In 2021, VCs invested $30 billion in crypto and blockchain startups. What became known as overcapitalization quickly became a dearth of capital in the startup world. 2023 saw many crypto startups scramble to get scraps—funding had dried up.

While investment opportunities dried up, blockchain technology provided permissionless and transparent investing opportunities to investors. The idea of democratizing capital, which takes root in crowd-funding platforms like pension funds and endowment funds, is not new. Decentralization offers a more refined model with tokenized ownership and transparent governance for investing in early-stage startups.

A Shift In Model

Traditional venture capital relies on a small group of investors based in tech hubs in Silicon valley, London, Berlin, and New York. These tech hubs use their expertise, due diligence, and reputation to pick a few promising startups, taking a huge chunk of equity and board seats to influence the direction and growth of the startup.

Web3’s decentralized venture capital is an open and inclusive model that utilizes novel blockchain technology, smart contracts, and tokenomics. This model allows for more participants, especially investors, developers, and community members, to contribute to the development of startups. The key merits hinge on the following:

● Transparency and immutable transactions:

Decentralization venture capital relies on smart contracts that automatically execute transactions based on hard-coded rules on the immutable blockchain. Hence, it reduces the overhead costs of paying lawyers, finance officers, and brokers.

For example, BasedVC is a platform that enables early-stage startups to raise capital through its smart contracts. These smart contracts are designed to streamline the investment process, eliminating the need for lengthy KYC procedures.

● Democratization of access:

The most important paradigm shift offered by this alternative to traditional VC is that decentralized VC changes the way capital is sourced. Blockchain technology, in its borderless nature, does not care for location, background, or income. Access is offered to all without regard for the traditional model's hurdles.

This creates a more meritocratic environment where the best projects, wherever they may be, can attract funding from a community of engaged investors. BasedVC believes that investments should be accessible to everyone. The firm identifies promising startups that are well ahead of the herd and brings their community of investors to them.

● Tokenizing securities:

Tokenized securities allow investors to enjoy the liquidity of their illiquid investments. Once a company or asset is tokenized and available to be traded on exchanges,l investors can cash out their gains without the need to wait for a liquidity event that typically takes a long time in traditional investing.

● Experimentation:

The launch of Bitcoin was a great experimentation. Decentralized investing offers startups the chance to experiment with different economic models and strategies. Startups in web3 can

choose gamification, tokenomics, and network effects as options. Tokens can work in different use cases including utility, reward, governance and even ownership. Gamification can enhance user retention by making their products fun and engaging.

BasedVC employs the wealth of experience behind the team to diversify its investment into different startups adopting these different business models. Investors can invest in blockchain gaming, web3 infrastructure, dApps, and even real-world assets.

● Community:

While this is already cliche, community is at the heart of Web3. Projects funded individual investors will also turn them into community members who are invested in the success of the venture. They become early adopters and offer valuable feedback to ensure that the startup doesn't fail.

basedVC creates community-specific pools that enable token holders from partner communities to access exclusive investment opportunities. Community members benefit from the perks of holding the token and enjoy competitive returns as dedicated investors.

Unlocking Liquidity

With the capacity to raise capital as the central objective, decentralized VCs like BasedVC are a vehicle for democratized investment. The Web3 firm does all the work a traditional VC firm would do before investing, helping boost transparency and fairness in investment for all investors.

Rudy De La Cruz is BasedVC’s Head of Strategy. He noted that the firm conducts due diligence and provides equal opportunities for investors to participate in investment opportunities.

He said: “BasedVC ensures transparency and fairness in investment rounds by disclosing relevant information about the projects, conducting thorough due diligence, and providing equal opportunities for all investors to participate in the investment opportunities available on the platform.”

“Moreover, we leverage smart contracts and blockchain, where transactions can be tracked to epitomize transparency. By maintaining open communication channels and adhering to best practices in investment management, BasedVC aims to create a level playing field for all participants,” he added.

The firm stands out with its unique offerings, providing investors with exclusive opportunities by leveraging its extensive network, deep expertise, and strong reputation in the Web3 space. It unlocks liquidity for investors and startups through early-stage deal sourcing, strategic partnerships, and co-marketing.

Decentralized VCs are a disruptive force in the venture capital world and a testament to the revolution that is blockchain technology. Whether it is a P2E game or a Layer 2 protocol, early-stage startup funding is now in the wave of democratization.