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28 Apr 2022

How Decentralized VC and Launchpad BullPerks Is Challenging Traditional Startup Investing

Aimed to democratize investment opportunities, decentralized VCs are challenging a traditional startup investment model. 

Moving toward the democratization of finance and investments, decentralized venture capital funds (DVCs) are challenging a traditional investment model. They make investing in promising startups accessible to a wider swath of society, offering permissionless and transparent investing opportunities for the average person. DVCs function with the same intent as venture capital (VC) funds that privately invest in startups. They represent a fundamental narrative shift in fundraising opportunities for startups and investors alike.

Traditional Investing vs. Decentralized VC

The era of insider’s clubs is over

For years, many startups relied on private sources of capital. To receive it, they had to scale their companies. Twitter, Amazon, Facebook, and other brands took this approach, bringing their early VC investment opportunities to wealthy people, pension funds, and other institutions, who invested in these companies and generated significant returns over time.

It's been a so-called "insider's club". According to law, only "accredited" investors and institutions can participate in a traditional VC fund. Accreditation is subject to U.S. Securities and Exchange Commission (SEC) regulations and is based on wealth, income, and measures of financial markets experience. Although it aims to protect inexperienced retail investors from reckless decisions it also locks investment and, consequently, enrichment opportunities for many people.

Drawbacks of traditional startup investing

Traditional VCs usually work with hierarchical organizations with multiple levels of leadership and highly bureaucratic decision-making. In such structures, information must go through the entire hierarchy from the bottom up and reach the center of power. As a result, innovation, engagement, and collaboration are limited by the imperfections of the old system.

With that in mind, the traditional venture capital concept can be considered a highly inefficient system shrouded in secrets and mysteries. Investors who have access to their own deal flow spend a lot of time raising and allocating capital provided by accredited investors, primarily ultra-high net worth organizations and individuals.

Democratization of venture capital

In traditional startup investing, it’s very challenging for the average person to join the so-called VIP club of these high-level accredited investors. However, with the advent of blockchain technology and the rise of decentralized VCs, everything has changed dramatically — traditional restrictions and barriers were blurred.

“Blockchain shifts trust in people and institutions to trust in technology.” - Bruce Schneier, a fellow and lecturer at the Harvard Kennedy School from The Nature of Trust.

Thanks to the blockchain, we can build a fair and equitable world by cutting out the intermediaries and democratizing investment opportunities. In decentralized VCs, authority and information are decentralized, and each individual is empowered. Open communications and transparency allow faster decision-making.

The experience of the ConstitutionDAO shows how decentralized VCs could work. It was a decentralized autonomous organization bringing together 17,000 investors that pooled crypto funds to collectively bid on a privately held copy of the U.S. Constitution. While their pool of Ether wasn’t enough to outbid another big investor, the experience proved the principles of a DVC: thousands of small investors could band together to fund projects within a blockchain-based environment.

Why Is DVC Gaining Momentum? 

Less friction

Just like special purpose acquisition companies (SPACs) have provided an easier way to public securities listing for a new company, DVCs will allow entrepreneurs to attract private venture capital more easily.

Eliminating geographical biases

While traditional VCs usually tend to invest in companies with headquarters in financial mega-centers, decentralized VCs are blurring geographical limitations with investment decisions based on the true potential of the project without a pivot to its geographical location.

Mentorship and support

Moreover, startup founders who choose to raise funds via DVCs can benefit from the diverse expertise of all online DVC members. Every member will have the opportunity to make suggestions on the business model and technology improvements. They can also provide some hiring and sales opportunities, and generally serve as ambassadors for the company – all openly on the blockchain.

How BullPerks Is Challenging Traditional Investing

One of the outstanding examples of a decentralized fundraising model is BullPerks. As a DVC and multichain crypto launchpad, the company pursues the mission to democratize investment opportunities for the community. BullPerks unleashes the power of the blockchain and a decentralized venture fundraising model to offer tremendous opportunities to everyone willing to invest in the best crypto projects on equal terms with big venture capitalists.

Committed to protecting users, BullPerks performs rigorous due diligence on all projects to bring only the highest quality deals to the table, generating significant returns for its community members. This process considers various project aspects, including regulatory, legal, financial, and business capabilities. It allows the team to bring only the most prospective deals to the community. The quality of technology, business model, and founding team experience are the main focus of this investigation.

Combining the best from traditional startup incubation with a decentralized fundraising model, BullPerks supports DeFi and NFT projects with everything they need for a public launch, including tokenomics consultation, PR & marketing, business advisory, and much more.

Decentralized VCs such as BullPerks shift foundational trust from people and legacy systems that are slow and highly regulated to a flexible and globally accessible blockchain secured by cryptography that is rapid and permissionless.

Disclaimer. This material should not be construed as a basis for making investment decisions or as a recommendation to participate in investment transactions. Trading digital assets may involve significant risks and can result in the loss of invested capital. Therefore, you must ensure that you fully understand the risk involved, consider your level of experience, investment objectives, and seek independent financial advice if necessary.

 

(Sponsored Article)

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