Synthetix Founder Kain Warwick Offers Valuable Fundraising Advice for New Crypto Teams
Renowned blockchain entrepreneur and investor, Kain Warwick, recently shared his insights on capital formation incentives in the cryptocurrency industry. With his extensive experience, Warwick provided guidance on the fundraising process for new crypto teams.
In a thread on X with over 123,000 followers, Warwick acknowledged that, even in 2024, successful Web 3.0 teams looking for funding must adhere to the current market trends. He stressed the importance of understanding the dominant meta and its impact on raising significant rounds.
From the perspective of seed investors, Warwick explained that the indicators of a project’s traction, such as user base, potential customers, and social engagement, remain crucial. Venture capitalists (VCs) still prioritize products with growing total value locked (TVL) and substantial numbers of followers on platforms like Twitter and Telegram.
To navigate the intense competition in early-stage fundraising, many teams have started introducing points, a concept popularized by Blast, an overly hyped OP Stack L2 project. By incentivizing activity and TVL at zero cost, teams can increase their chances of securing larger investment rounds.
According to Warwick, seed rounds completed within the range of $10 million to $50 million in fully diluted valuation (FDV) are often seen as successful for investors. In fact, most investors make a profit from these rounds.
Warwick also shared his personal recommendation for teams to break away from the current anti-retail meta. He advises launching a retail token with a valuation ranging from $10 million to $1 billion after three rounds of private/seed funding with VCs. However, he emphasizes that such a move requires facing potential pushback from VCs and regulators. Warwick believes that it is challenging for first-time founders to take this step due to the strong incentives they face. Alternatively, he suggests attempting to shift the meta and potentially face significant setbacks.
In addition, Warwick acknowledged the role of retroactive airdrops from 2021 to 2023 in introducing tokens to a large percentage of retail owners. He believes that the euphoria surrounding meme coins served as a natural catalyst for the adoption of Ethereum’s Layer 2 solutions.
With his valuable insights and experience, Kain Warwick’s advice serves as a useful guide for new crypto teams navigating the complex world of fundraising.