This space is hosted by WOLF_WebThree
Space Summary
This Twitter space delves into the complexities of venture capital (VC) and the evolving investment landscape, particularly within the crypto space. The discussion highlights how the immense number of available projects necessitates thorough evaluation and patience from investors. Recurring themes include the importance of transparency and clear communication, identifying red flags early on, and providing constructive feedback to founders. Participants emphasize that retail investors currently have more opportunities to engage in VC activities, given the accessible platforms available. The conversation also reflects on the rise of meme coins, underscoring the market's volatility and diversity. The space concludes by stressing the significance of community and networking for successful investing in today’s climate.
Questions
Q: What is crucial for success in venture capital?
A: Understanding the intricate details and dynamics of VC investing.
Q: How should investors approach the flood of crypto projects?
A: With thorough evaluations and by being selective in their investments.
Q: Why is patience important in investing?
A: To avoid impulsive decisions that can lead to negative outcomes, such as the FTX scenario.
Q: What should be the basis for making investment decisions?
A: Ensuring that the investment criteria are perfectly aligned.
Q: What does the rise of meme coins indicate?
A: It highlights the diversity and volatility in the crypto market.
Q: How can founders improve their projects?
A: By seeking and integrating constructive feedback from experienced investors.
Q: What is essential for a successful VC-investor relationship?
A: Transparency and clear communication.
Q: How can retail investors get involved in VC?
A: Through accessible platforms and by gaining a deep understanding of the investment process.
Q: What can save investors time and resources?
A: Identifying and addressing red flags early in the investment process.
Q: What amplifies success in the current investment climate?
A: Building and leveraging a strong community and networking.
Highlights
Time: 00:10:15
The Importance of Understanding VC
Time: 00:17:30
Navigating the Crypto Project Flood
Time: 00:25:45
Patience in Investing
Time: 00:32:00
Criteria for Investment Decisions
Time: 00:40:30
The Rise of Meme Coins
Time: 00:48:50
Constructive Feedback for Founders
Time: 00:57:15
Transparency in VC Relationships
Time: 01:05:20
Opportunities for Retail Investors
Time: 01:14:45
Identifying Red Flags
Time: 01:22:30
The Role of Community and Networking
Key Takeaways
- Understanding venture capital intricacies is key for successful investing.
- Thorough evaluation of crypto projects is crucial amidst market saturation.
- Patience is essential to avoid pitfalls like the FTX scenario.
- Investment decisions should align with perfect criteria for success.
- Meme coins showcase the crypto market's volatility and diversity.
- Founders benefit from seeking feedback for project enhancement.
- Transparency and clear communication are vital in VC relationships.
- Retail investors have increasing opportunities in VC activities.
- Early identification of red flags is valuable for saving time and resources.
- Community and networking play amplified roles in the current investment context.
Behind the Mic
But, yeah, during the last cycle, there was a lot of choice. There was a lot of fomo from everyone. There was a lot of VC's that weren't really doing DD. That's why we end up with things like FTX. And so this is, like, all the way from the top down to the bottom. There was a lot of fomo all the way down to retail. And I think that a lot of investors across the stack have just got a lot more patient. I mean, there's now, what, hundreds of thousands of crypto projects with all the meme coins, et cetera. We see so many decks, we speak to so many founders. And I think that what we've done a really good job of this cycle and a lesson that we've learned is just, if everything isn't completely perfect, you can pass. And unfortunately, we end up in a lot of situations where founders are asking for feedback, and I wish I could provide them with something more rather than just like, look, it was really good. I hope the best for you guys, but, you know, maybe just not the right fit for us. Red flags here. Maybe there's one thing that you can work on, but I'm doing, we're doing a lot of that. And we kind of pride ourselves in that regard, which I think a lot of funds last cycle didn't. And they really fell into this fomo mentality of like, you know, everyone's raising all over the place, I need to deploy my funds or there's going to be no good projects left. But now with, like, hundreds of thousands of crypto projects and everyone's competing for the same bit of attention, you can afford to be a lot more picky. And so that, for us, I'd say, it's definitely the number one takeaway. There's one part to that you said there, and I think it holds true is, I'd love to hear your expansion on this man. I think what you said around, like, founders, sometimes it's not about just investing capital, it's looking for value adds that a diverse fund of what we're doing over at Vanta can kind of add into. I'd love to hear you double click on that part, right? Because I just feel like I'd love to hear that sentiment a little bit more. Maybe share your perspective there. Sure. But we're always plugging our events. Sorry, forgive me if you're familiar with that. But we're sometimes struggling to just get on normal working hours and figure out everything. I'm very happy to be here. So thank you for having me back. Amazing. Yeah, I mean, like I was saying, we see so many decks. And at Vanta, we have researchers across different verticals. We have a committee of key opinion leaders within the space that we communicate with. And whenever we get to pitches, we're always looking to see where we can add expertise, where we have someone who knows a lot about a specific vertical and where, as a community, we can also help. So times where we've missed, there's something there and we can oftentimes lean on the community to try and provide feedback to founders. So we do sort of play that role where we can come back and say, hey, like, this isn't for us, or this is something really interesting. But maybe there's someone in the community who can kind of step in or help. And we take that very seriously, which I don't think a lot of projects really take the time to do. I think once they kind of invariably spin up on a new cycle, it's just like capital's there, let's throw it at it. And I think that's where a lot of the patience and the element of finding perfect deals really comes into play because a lot of projects we see, they're good pitches, they're good founders, but it's just not quite what we're looking for. And we can kind of put you in touch with the people that would be best suited to help your project. So to answer your question, we're really looking to provide comprehensive deal analysis and being able to be very communicative with our group and with our committees on that feedback, which I think would be lost if we took a broader approach. That was super insightful. Thank you so much. I think one of the things that you just noted there as well, particularly as those functions and bringing in community, adding to that dynamic of deal flow and then sitting on some of those calls, it's really cool that we're bringing analysts that are actually part of the community also now as well. So it's not just a matter of the partners of the fund, it's actually truly the community getting involved with those founders, getting involved as stakeholders. So super cool. I think that makes just a hell of a lot of sense on why you guys are only having a lot of success so far to date. I'm curious on for Vanta's plan, let's say three to five years from now, what does that look like for you guys? I don't know if Mike or Josh you want to take that question. Happy to take that one, Josh, unless you want to give it a start. No, go ahead. Perfect. That's a really interesting question because, I mean, web3, three to five years is like, I don't know, like web3 years is what is that, like it's like 100 in a web two space. Exactly. Exactly. You never know what's going to happen in the crypto space, but we try to plan as best as we can. So where I see Vanta going is currently where we're setting the foundation for this collaborative research development project. And what we're trying to do is essentially make it open to as many people as possible. So over the next year or so, looking to attract more and more contributors, more people to the Dow, more analysts, more researchers, people who really take a discretionary interest within a specific vertical of crypto, bringing them on board, making sure that they feel compensated and rewarded for that. And as we do start to see this, we're going to find that as bigger funds, bigger institutions start to adapt within web three, they're going to have to see this model. They're going to have to see the power of the community, and they're going to start to adapt and build out new frameworks within their own investment thesis. So over the next three to five years, we plan on growing our Dow significantly to meet some of these challenges within the space and continue to innovate within that web three ecosystem. Honestly, I love hearing that. I think particularly like for those who have context into different styles of investing in different fields, if at the heart of content creation and how we get through bull and bear cycles, particularly with things that fundamentally we find intriguing, everyone on this call is super heavy on web three and not in some sort of interesting meta game today. One piece that anyone identifies with is core to that foundation. Realistically, I think communities like yourselves and that kind of application has a tremendous amount of potential. So I love hearing that. That's super helpful to understand. Yeah, for sure. And just to add to that, too, I think, you know, the other thing, the other aspect to that, too, is that as we're going to bring this web three kind of investing model to the space, we're also complementing existing traditional funds. So what we truly hope to do is obviously grow this collaborative model, but also be able to work with some of the larger funds that might not have the in-house capability to provide the DD and the research analysis that some of their LPs are looking for. So, you know, say we bring in a very traditional fund that has experience in Bitcoin mining or proof of work blockchains, like we can hopefully provide the extra little bit of added support in these newer verticals. That to me is the most interesting part about what we're doing. Yeah, it's super cool, especially on the convergence into traditional finance. And on that piece, do you bring up to, I don't mean to jump in here, but it's super interesting that direction as well. Can you guys maybe break this down a little bit more, a little bit clearer? Because I feel like we have sort of some people representing some different fields, both sort of community leaders right now and the Dow configuration and then also fund managers or even founders. Can you break down really why you want to talk to one style of an interested representative versus another, how that might focus in and what kind of those capital requirements might mean for Vanta, for instance, in that stance? You're just bringing community on how you're bridging that gap of what traditional finance looks like on your end. I'd love to hear a little bit more on that side of things, too. Absolutely. Yeah, you want to take that one, Josh? Yeah, I mean, look, the easiest way to explain it is if you kind of break it down to like a very ground floor example, you're going to have essentially what we do as a researcher community is make sure that anyone that we bring ends up getting compensated in the form of fees. Researchers are going to get paid for their work. You know, maybe it's whales or kols that are helping support the project and making videos and tweet threads or providing TVL, they're going to get compensated financially based off fees that we take on a deal, ideal basis. So anyone that's actually providing value, there's going to be an incentive mechanism there for them to want to do that. And so there's a place for everyone within Vanta. But we just really are interested in attracting web three natives that care about the space, they care about providing value to the group, and they want to just be, you know, shoulder to shoulder with other people that think the same way they do. Yeah, I love that. I think it's really awesome that you guys have incentivize the community, it makes more sense to why you guys are doing so well, too. Like, if people are incentivized with just, you know, feeling like they're part of something, they love staying. Yeah, I would agree. I think so, too. That's a great question there. I want to bring it back a little bit, actually, and ask this. Just because were talking about the community and the Dow and stuff, just, I feel like this might add, little bit of extra context here. We've been talking about pretty high level vc stuff for a while now, but I'm curious on Mike and Josh, if you could give us some color, a little bit on your background right before you hopped into this whole world of VC, what got you interested in the first place? Kind of what the vision was, maybe when you got started, how many things changed? Just walk us through a little bit of that. I feel like it would just give a bit more context to the company. Sure, I can take that one. So, yeah, my background prior to getting into the world of crypto was a traditional finance. I got a degree in finance from a canadian university. I ended up working in sales and trading for an FX brokerage out of Toronto. All the while, I became quite obsessed in my free time in crypto. Finance wasn’t quite doing it for me coming out of school, but the idea of a decentralized financial system always really intrigued me. So then I got into the world of launching my own crypto projects and operating them. And then that's kind of why I led to starting Vanta from the very beginning. That's kind of where I found my passion. And if you look out, you'll see the team of Vanta is kind of a very unique mix of technical and founders and finance people. So it’s a really interesting group of people that have started the Vanta DAO and bringing the community together. That's super cool. That's great color. And, Mike, what's your background look like? How did you get into this space? So, I was the founder of a crypto project called Open Relay, which was decentralized exchange technology. It started off as a project to learn more about Ethereum smart contracts, things of that sort, and started to really gain some momentum with that project. And then two years ago, it kind of wasn't the right time and wasn't able to keep operating it. Unfortunately, we had to wind down. But routinely throughout the AMA's, people would ask, and they would say, so how do you get involved with VC? Or I have an application that I'm building. How do I get your feedback? And so that's where I bumped into Josh in terms of the Contango Group and felt like it was just a perfect marriage there in terms of getting access to expertise within the space and then being able to share some of that on the community front. Cool. In a weird way, I feel like we've been talking so much about like, why you're so exciting for Vanta and DAOW, but, like, I'm not necessarily sure if we cover this like why sort of the guy on the street that we're bringing in and what you guys are actually trying to do make sense. So, what specifically you guys are focused on solving and how you think that's going to work exactly? From like the question around like what's a nice summary here for us so far, how would you describe that? Sure. I mean, as Josh mentioned earlier, in the very beginning of the conversation, Vanta is a community driven DAO for collaborating on things such as research, supporting crypto projects, providing ideas, and just basically plug-in collaborative ideas. So people from all sorts of different backgrounds come together and we go through our process, making that as open and as accessible as possible. And in terms of the problem we're solving, it's this current gap in VC where you've got more top-down traditional firms that are running their own thesis, running centralized, and might not have the capability or expertise to analyze specific deals. As you all know, the crypto space is very decentralized and very opaque. So oftentimes, if you are looking in the crypto, you're trying to find a specific niche, and you may not be able to have that thesis. However, if you've got a collective Dow community where the thesis is run by a collective group of people that have different interests within the space, you can more easily identify some of these better opportunities. You can collaborate together, you can provide better feedback, and you can bring that back up to the Dow where we provide analysis and further discussion. That's the primary focus of Vanta. And I do think that as the space evolves, it will become more rid of those, just more tech driven VCs within crypto and better expand to larger funds. I guess that opens a really interesting gap in the market whereby we provide a complete research and, due diligence support for bigger institutions. Yeah. And I think on top of that, just to add to that Mike, Founders MFA, they're all, some of the smartest people, we know founders a lot smarter than, you know us across a broad range of industries. And when we can bring them together in a room, hear their ideas of feedback and research, brings massive support to a project. And Vanta's just bringing a better, more fluid process. Because now it's tough to find the right people who have that expertise and all come together, but the right location where they need to be. No, that makes a ton of sense. I love it. Thanks for sharing that, dude. On the topic of the bull market, since again, another very common conversation we have particularly as people who are super involved. How are you guys planning your cycles? I know everyone says you should build on bear and you're having tons of experiments throughout those times, and then deploy at very specific moments. I'd love to hear how you guys really think of planning a cycle when a bear market hits so that our people can find some interest in that. And then maybe you can share where it kind of fits in the context on the end of things. Yeah, sure. That's a great question. Thanks for that. A lot of what we do, just to talk about the experiment a little bit, is a lot of research. And we bring a lot of feedback from our community in terms of timing the market. There's no perfect science when it comes to VC. But from a fund perspective, we do look at trajectories, we do look at the overall macro investment indicators in terms of timing. But within web three, we always take a holder approach. The support that we provide, some analyses we do tend to look at more of a seasonal basis in terms of sentiment. So we'll often rely mostly on sentiment analysis, analytics to dictate what our approach is based on the timelines. Makes sense. Yeah. Love that point. I think to piggyback off the back of that too, because there was like a few different pieces there, we’re starting, like we said, and what makes us different with this DAO setup. So while we said building in the bear market, you can build all you want, because let's be real pros and content creators are still out there researching stuff, figuring out what makes sense to build. It’s more critical to build than the teams with extra deal flow, extra finance on hand. We’re doing it all together. Plus this DAO thing for us is, like we wanted there's so much less friction there. We're launching this model and the attention there is, people can hop involved because another piece to it is, a lot of times these VCs are not high enough level so people don't necessarily need the research or aggregate info that we normally base our planning around and timing the markets and stuff. If this is a good perspective there and hope that answers everything on that. Yeah. Super interesting there too. I'd love to underscore this point as well. Essentially the concept that we're talking about is if you're part of the day to day within the dow. If you're part of the dow itself, even without having some sort of scaled team at the top that's telling you about call it cycles and how deal flow should run and be optimal. If on the individual level you are also good enough to be an expert within this space hanging out and communicating within it, you yourself can be that contributor. I think that's one of the things that is a bigger vision of Vanta that again, is really cool and helps tighten up why this it's super fun hanging out with you guys and understanding more about what you guys have as a vision. So I appreciate you sharing that piece, too. Yeah, it's just super important for us to really bring that community there. Yeah, and just a little more color on that piece. If you think about traditional web three research firms, what's the one bill daily, the massive cost behind payroll, researchers, the full OPSEC team data research, whereas Vanta, you don't necessarily need to pay some massive overhead for a huge team, you've got this decentralized model where individual contributors can come and go as they please. And you're not incurring those large scale costs.. You're incentivizing your individual contributors, compensating in the form of deal flow so participants within the community are making, they're basically making revenue based on their involvement within Vanta, as opposed to paying some traditional huge team to recruit researchers. That’s an excellent point. When you talk about how each person within the community can still be incentivized without hiring some massive overhead team structure, the autonomy piece is super cool and honestly an increasingly relevant topic, so really appreciate you guys sharing that. Absolutely, 100%. We're building the decentralized economy of support. Founders gain direct access to community participants. So that's kind of where we want to take it. And that's awesome. So I just want to know your thoughts on how progressing and the anticipation of the next bull market helps the dao going forward. How do you guys see your system playing into that as soon as things start to pick up again? Thanks for that. Absolutely. I think, as we spoke about before, we're building on a foundation where we're incentivizing based on contributions. So if we support a project and it goes to market, we're providing incentives to each part of the community down to the smallest contributor to
