How crypto and De-Fi changes the picture of venture funding process and helps to increase the value, funds collecting and projects visibility? Read the VRM’s CEO Andrei Grachev opinion «The art of the startup» for CV VC TOP 50 REPORT 2021.

As venture funding in 2021 broke all known records, the opportunity window for new ideas is wide open now. Startups could never get financed that easily. However, there are still lots of tricks for effective startup management, which may increase the value, funds collected, and project visibility. These tricks may turn a startup into a genuine success.

Crypto change the whole picture

The hardest part of the overall investment process is the seed phase. When a project is still under development, has no public acknowledgment, and lacks finance, it is hard to convince people to invest. So here comes crypto to refresh the total investment picture,

transforming it into real art.

Crypto provides a new dimension of freedom for literally all projects. The tokens become immediately liquid after the listing and give a lot of opportunities to investors. If appropriately managed, tokens attract users and quickly spread information about the project. Thus, crypto solves two major tasks of every new project: spreading info and funding.

However, this is easy to understand but quite hard to realize in practice. Let us quickly highlight the most common strategy for a new token launch.

Step 0. Institutional fund-raising. This step is the beginning of a long road and not only about money but more about the right contacts, which can introduce a project to valuable partners and other good VCs, bring value and support the project in the future. There are a

lot of different VCs on the market – proprietary, wealthy individuals, community-based, profit makers, and profit takers. It’s important to dive deeper into each potential partner, to understand clearly what kind of business the partners do. The best form of VC is proprietary, with no community money behind, with a clear plan for investments

and long-term vision of the market, coupled with a good portfolio, industrial expertise, and strong network among VCs and exchanges. For example, VRM Ventures belongs to one of the biggest market makers on the crypto market VRM invests in the following areas – CeFi

exchanges, web3, DeFi, Cross-chain solutions, and end-customeroriented directions NFT and metaverse.

Step 1. IDO. The token is new, and no one has a clue what it is. The only way to launch it is to put it into an existing group of investors, providing them with an offer of a unique entry price (usually 0,5-0,8 off the future listing price). A launchpad is the best starting venue to create primary FOMO and involve users in creating the project community. FLy Launchpad stats prove there is a very high interest from investors for quality projects. Typically, project tokens are oversubscribed 3-30 times! Voilà! Who asked for FOMO? Besides market visibility and raising funds, an IDO helps check for real market demand, increase the number of token holders and establish an initial secondary market price for the project’s token.

Step 2. Listing. Listing a token is a vital and very fragile process. Successful tokens are welcome on all exchanges and provide enormous power for the project to be adequately financed. However, the first listing is always a pain in the neck. The project should create

enough liquidity on every exchange, involve market makers, etc. If the project made the right choice at step 0, its backers will help the team select the appropriate trading venues, get good listing conditions from CEXes or have a proper scheme for DEX liquidity management. DEX listing seems to be the easiest part of this process and can be realized in a minute. However, DEX makes it very hard to maintain a proper token price, as it is totally retail-based and too sensitive to every small market movement. If the project has a lot of retail token-holders, who can arrange heavy selling pressure, the best way is to be listed on a CEX first and then, when the price has stabilized, open a pool on a DEX.

Step 3. Building loyalty and free-floating management. Once a project is up, the whole new game starts in earnest. Any community is really hard to manage: people will love the project when the token is up and hate it at all other times. No token can go up forever, so the project has to develop a good reason for users to hold it. Staking solves this. The staking contract should be ready at the start and should be appropriately presented to token holders because the main purpose of staking is to prevent token-holders from selling the tokens.

What to expect in 2022?

The world is trying to recover from the pandemic. Quantitative easing by governments multiplied combined with longer hours at home during quarantine and accompanied by prolonged uncertainty about the future creates an ideal storm for investments. Crypto is the area where you can feel this storm most vividly:

  • NFT, metaverses, and DeFi contracts are just at the beginning of their mass adoption and gain value every day
  • The classical finance world ceased criticizing crypto and started active penetration into different areas. This still looks more like testing the water, but their steps are becoming bolder, and the level of investments has reached 7-digit figures already.
  • Legal adoption by governments will not stop with brave El Salvador, and more countries will follow as they try to take a piece of this pie. This year has the ideal momentum for any new, genius, and brave ideas, no matter how eccentric they might look. Take a chance to get on this opportunity train!