Source: Okcredit

I started a movie series yesterday based on a recommendation from a friend. A part of the movie was how a Cuban-American female programmer who had an idea and had already built an algorithm for a cryptocurrency that would “revolutionize the future of currency”, a banker, and a Haitian-American gangster (long story) had to work together to raise funds for this cryptocurrency - GenCoin.

According to the plot, cryptocurrency was not yet a household name (as is the case now), however, Bitcoin and a few other cryptocurrencies were around. Let’s just say people were still very much skeptical about the idea of cryptocurrencies and web2 companies were avoiding them like a plague. Can’t blame them now, can you?

So, to raise funds for GenCoin, the gangster and the banker had to talk to multiple big shots, 98% of whom laughed at the idea or thought it illogical.

Pause…

This was the part that got me wondering.

How were earlier crypto projects able to pull it off? How were they able to raise funds before the whole web3 VC firms, IDO, ICO, etc started?

Crypto projects before web3 VC funds, ICOs, IDOs, and the rest became a thing:

The true emergence of crypto started with the launch of Bitcoin. but of course, you already knew that. During that era, fundraising for cryptocurrency initiatives was difficult. There weren't many well-established avenues for traditional venture capital firms to raise capital for projects in the crypto space and skepticism played a big role in this. I mean, only a crazy person will want to invest a large sum of money into a new project based on a technology that is yet to be tested.

Even Bitcoin did not go through the standard fundraising procedures that are now common today with crypto/blockchain projects. Rather, it was based on a community-driven methodology, wherein early adopters and miners helped to develop and advance it.

So it is safe to say that the community-driven approach was the fundraising method utilized in the crypto industry.

Alternative fundraising techniques, such as Initial Coin Offerings (ICOs), wherein new enterprises might offer tokens to the public in exchange for money, arose as the cryptocurrency field developed. As a result, crypto initiatives were able to forego conventional financial channels and go straight to a worldwide audience for support. A growing number of specialized venture capital firms and investors entered the market with the emergence of decentralized finance (DeFi) and the wider acceptance of blockchain technology, creating web3 (web3.0) funds specifically for this purpose. Due to this advancement, it is now more possible and sometimes easier for cryptocurrency initiatives to secure funding from investors who see the potential of the technology.

In another piece, I explained the various models through which crypto projects crowdfund in the industry.

Side Note:

A new web3 VC firm, Paper Ventures launched yesterday with an initial capital of $25 million. The VC firm, like the others, is aimed at providing support for early-stage innovative blockchain projects. It was the headline news that got me more inclined to write this article.

To conclude this piece, the startup founders I started this article with eventually got hacked off the first actual money ($1.8 million) they got as an investment ($300K which belonged to the gangster). Yet to know what their next step was.

For context, the name of the series is “Startup”. Now you know where the idea of the title of this article came from.