We all know that the crypto space is not that professional yet, especially when compared to established markets. Every market has to develop and will become mature over time.
We have interviewed different Venture Capitalists and Fundraising pools within the crypto space. The names of these VCs are confidential, but trust us on this: there are some big names behind this information!
One of the main problems in the crypto or blockchain space right now and especially in the GameFi industry is that projects are Refunding investors after signing the contract.
What’s even more disturbing, is that a lot of these VCs already did some marketing exposure or helped them to get traction within the space. For example: To gain hype, visibility, or get in touch with other investors / important collaborations.
Why is this a concern?
As previously mentioned, the market is still quite ‘immature’. In order for the crypto & blockchain space to develop and grow, these kinds of things cannot happen. Our talks with different VCs made it clear that projects in the Blockchain Gaming / GameFi industry are not always professional when it comes to fundraising.
As the blockchain gaming industry grows, a lot of new projects are entering the space. While this isn’t a bad thing, it seems like, sometimes, these projects are choosing quantity over quality. They also want to move too quickly, which can mean that certain partnerships are thrown under the bus.
There are four main reasons why this is a problem:
- In the long term, this creates a trust gap between investors and projects.
- Investors will be less likely to step into the crypto space.
- The development and maturity of the cryptocurrency and blockchain markets will stagnate.
- It will give blockchain gaming a bad name, while this space has so much potential.
How can it be solved?
Of course, sometimes, unexpected things can happen. This can change the way projects fundraise. However, a contract is supposed to cover this and provide security for VCs. Imagine if refunding after investing happens a lot: fewer investors will be ready to invest in similar projects, which will hurt the development of the blockchain (gaming) space.
These kinds of things can be solved by:
- Setting up clear tokenomics.
- Treating every investor and VC equally, especially after already signing an agreement.
- Creating a better fundraising strategy.
- Making clear agreements with investors & VCs.
- Communicating possible changes in the above-mentioned points as early as possible in order to come to agreements with investors.
In addition, transparency and honesty is key. By oversubscribing and then later cutting allocation / refunding, part of the investors are essentially being punished. This is not only a bad look on the project, it also often means the project is not transparent when it comes to fundraising.
The blockchain gaming space has potential and there’s a lot of demand. That’s why it’s important that the market becomes more professional and that there is more structure in fundraising. At the moment, in our experience talking to multiple investors and VCs, this is sadly not always the case. We hope that this changes, because it would lead to increased maturity and professionalism, which helps the whole cryptocurrency market grow.