In Part I, we looked at Web2 fundraising models as the reigning thesis. Part II then looked at how Web3 put forward an antithesis, trying to decentralize capital formation. This Part III is looking at complaint offerings via platforms such as Angel.co, Echo, Fairmint and Legion as a possible synthesis.
A. Where Angels (used to) meet: angel.co
AngelList goes back to 2010 and was launched by Naval Ravikant and Babak Nivi with an initial focus on fundraising and hiring (later spun-off into Wellfound) and a more recent pivot towards pooling investors in fund-type structures.
Fundraising on AngelList is designed to simplify the process for startups while giving investors streamlined access to opportunities. Here’s how it works:
- Setup and Profile Creation: Startups begin by creating a company profile on AngelList. This includes details like the business idea, team, traction, and funding goals. Founders can also incorporate their company (typically as a Delaware C Corp). A strong profile is key—it’s the pitch investors see.
- Choosing a Fundraising Path: Startups have a few options:
- Direct Fundraising: Founders can share a unique link to their profile with potential investors—angels, VCs, or even friends and family. This link acts as a one-stop pitch, and interested investors can commit funds directly. This direct model resembles Carta to some extent, and also forms the core of Fairmint which we will discuss further below.
- Syndicates: A lead investor (often an experienced angel) curates a deal, invests their own money, and invites others to co-invest under the same terms. The syndicate pools funds into a single entity, and the lead typically earns a carry (a percentage of profits) if the deal succeeds.
- Rolling Venture Funds (RUV): This allows startups to accept investments over time rather than in a fixed round. Investors subscribe to the fund, and the startup draws capital as needed, offering flexibility for both sides.
- Investor Access: Investors on AngelList—ranging from accredited individuals to institutional VCs—browse opportunities based on their interests and eligibility. Accreditation is required, and AngelList verifies this during onboarding. Startups can make their raise public, private (invite-only), or semi-private (visible to certain networks).
- Funding Mechanics: Once investors commit, AngelList handles the heavy lifting: Funds are pooled into a special-purpose vehicle (SPV) or similar structure, which then invests as a single entity in the startup.
- Blockchain-based smart contracts manage the transaction, ensuring transparency and automating paperwork like SAFEs or equity agreements.
- Payment: Investors wire money (sometimes via ACH or crypto like USDC), and startups receive it in their AngelList-provided bank account.
- Fees and Costs: There are no direct fees for startups to raise, though syndicates involve a carry for the lead (typically 10-20% of profits). Investors might pay a fee per deal (e.g., 5% carried interest), but many direct investments are fee-free. Additional costs—like legal or banking fees—are transparent and often bundled into the process.
- Post-Fundraise: After the raise, startups use AngelList’s cap table tool to track ownership and investor updates. The platform also offers ongoing support for future rounds or exits, keeping everything centralized.
Summary evaluation
Raising on AngelList can be fast—some raises close in days—and emphasizes efficiency over traditional VC roadshows. Startups benefit from access to a broad investor pool (over 100,000 accredited investors use the platform), while investors get curated, vetted opportunities.
Since 2010, AngelList has facilitated billions in funding, proving it’s a go-to for early-stage capital in the tech and startup world, so as a founder looking for equity capital who is looking to streamline their raise and find a way to show it to a broad base of (accredited) investors, Angel should be considered. However we did receive feedback from a number of Web3 companies that Angel rejected their profile. Investors, in turn, gripe about the highish fees when investing via a syndicate.
Overall, the sense is that Angel is now more focused on the (institutional) investor side rather than the (scrappy) founder side..
Echoing the group leader: Echo.xyz
Echo.xyz is designed to connect investors with early-stage startups and cryptocurrency projects, enabling collaborative investment opportunities.
Similar to Angel, it operates by allowing experienced investors, referred to as "Group Leads," to create investment groups. These leaders share deals they’re personally investing in, and other users can join these groups to co-invest on the same terms. The focus is primarily on digital assets and innovative startups, aiming to democratize access to private funding rounds:
- Group Creation and Leadership: Any user can apply to become a Group Lead, though the process might be selective or slow. Once approved, these leaders curate investment opportunities they’re excited about and share them with their group. The catch is that they must also invest in the deals they present, ensuring alignment with their followers.
- Investment Opportunities: Group members can browse available deals and decide, on a deal-by-deal basis, whether to invest alongside the leader. The platform typically uses USDC for transactions, making it seamless for crypto-savvy users. Investments are pooled into a single entity, like a special-purpose vehicle (SPV), which then funds the startup or project.
- Onchain Execution: The process is powered by blockchain technology, meaning investments are recorded and managed transparently using smart contracts. This ensures that funds and ownership are handled securely without the Group Lead directly controlling followers’ money.
- Accessibility and Eligibility: The platform tailors its availability based on local laws and a user’s investment experience. During signup, it assesses whether you’re eligible to invest in your region and filters visible deals accordingly. You’ll need to connect a social account (like X or Farcaster) for identity purposes, though your real name stays private.
- Fees and Incentives: Echo takes a cut—typically 5% of profits made by users on successful deals—meaning it only earns when investors do. Additional costs, like regulatory fees or token warrants, are shared among investors but don’t profit the platform. Group Leads may also earn a percentage of followers’ profits as an incentive.
- Founder Interaction: For startups raising funds, the process starts by convincing a Group Lead to invest and share the deal. Founders don’t need an Echo account to receive funds, and investors are discouraged from contacting them directly—communication goes through the Group Lead to keep things streamlined.
Summary evaluation
Echo’s appeal lies in its community-driven approach, blending the expertise of seasoned investors with the enthusiasm of a broader crowd. It’s particularly geared toward those comfortable with crypto and high-risk, early-stage investments, offering a structured yet flexible way to participate in a decentralized economy. Since its beta launch, it’s facilitated significant funding—tens of millions across dozens of deals—showing it’s carving out a niche in the crypto investment space.
However, spontaneity of investing has its regulatory limits, which in practice means that individual investors will be vetted on their eligibility (read: accreditation) before they are allowed to invest via Echo, and the onboarding is fully KYCd.
Towards a fairer mint: Fairmint.com
Faimint puts “all your equity, onchain”, using blockchains to issue, manage and transfer equity by letting investors hold tokenized stock in their wallet and using the portable Open Captable Format (OCF) from the Open Captable Coalition.
Startups begin by integrating Fairmint’s tools into their own websites, creating a single URL to a customizable investment portal—think "invest.yourcompany.com."
This portal lets you select all major SAFE templates or your own custom agreement, and supports side letters and token warrants.
The process is powered by smart contracts on the blockchain, typically Ethereum-compatible, which automate the issuance of tokenized equity (ERC-20 compatible tokens).
This means no intermediaries like special-purpose vehicles (SPVs) are needed—investors send funds (crypto or fiat) directly, and the tokens representing their stake are issued instantly. However, your project will need to be setup as. U.S. C-Corp.
Fairmint handles compliance, embedding regulatory requirements—like lockup periods or transfer restrictions—into the tokens themselves, ensuring adherence to U.S. securities laws (e.g., Reg D, Reg A+).
For founders, it’s a plug-and-play setup. They can launch in a few clicks, customize the portal with their branding, and manage everything via a dashboard. This includes cap table management—Fairmint, as an SEC-registered Transfer Agent, consolidates investors into a single cap table line (roll-up investments) if desired, keeping it clean and avoiding the clutter of multiple SPVs. The platform also offers tools for KYC (Know Your Customer) and AML (Anti-Money Laundering) checks, SEC filings, and state blue sky compliance, all automated to reduce legal overhead.
Investors benefit from flexibility and potential liquidity. They can invest privately (e.g., via invite-only links for VCs) or publicly (if the offering allows general solicitation), and the tokenized equity can potentially trade on decentralized secondary markets, unlike traditional private shares.
Fairmint doesn’t custody funds—transactions are peer-to-peer, reducing risk and fees. Pricing is straightforward: basic SAFE issuance is free, while roll-up features cost a one-time fee.
The big idea is community ownership. Beyond traditional investors, Fairmint lets startups reward contributors—like early users, contractors, or fans—with equity, aligning their interests with the company’s success.
It’s pitched as a Web3 layer for the startup stack, turning equity into a programmable tool for engagement and growth. Since its founding in 2019 by Thibauld Favre and Joris Delanoue, it’s aimed to shift the paradigm from elite-only funding to a broader, stakeholder-driven model.
A legion of (retail?) investors: Legion.ventures
Legion Ventures is a community-driven, early-stage venture capital platform focused on making private investment opportunities, particularly in Web3 and cryptocurrency projects, accessible to a broader audience.
Founded in 2021 and based in Romania, it aims to democratize access to high-quality, early-stage investments traditionally reserved for large venture capital firms.
The platform offers a range of services, including funding, marketing support, and guidance for blockchain startups, with a portfolio that includes decentralized finance (DeFi), non-fungible tokens (NFTs), and infrastructure projects.
Legion Ventures emphasizes transparency and community involvement, leveraging Web3 principles to provide retail investors with opportunities to participate alongside major players like Binance Labs and Sequoia.
It has invested millions in over 140 projects, boasting a significant community of over 15,000 active members. The $LEGION token enhances user benefits, such as staking rewards, platform fee discounts, and access to exclusive investment opportunities.
However, as with many projects that claim to make investing more accessible to a wider public, regs (see below) stand in the way of making this work, unless platforms become fully licensed to raise from retail.
Legion makes that claim but is - like all other platforms - restricted:
- Romania, as an EU member state, falls under the broader EU regulatory environment, which includes frameworks like the Markets in Crypto-Assets (MiCA) regulation, adopted in 2023 and now applicable across the EU. MiCA aims to provide clarity and consumer protection for crypto-assets, requiring platforms dealing with token offerings or trading to adhere to licensing, transparency, and anti-money laundering (AML) standards. For Legion to be MiCA compliant, this would involve ensuring that token sales or investment opportunities offered through its platform meet EU requirements, such as clear disclosure of risks and project details to investors. Beyond boilerplate terms such as “Users are responsible for ensuring their access and use of the Platform complies with all applicable laws and regulations in their respective jurisdictions”, it is not clear whetherLegion has gone through the full licensing under MiCA. Additionally, its over-the-counter (OTC) marketplace and $LEGION token utilities—staking rewards, fee discounts, and access to exclusive deals—suggest it operates within a decentralized finance (DeFi) context, which often navigates a gray area of regulation. While Legion Ventures doesn’t explicitly detail registration with a specific financial authority (e.g., Romania’s Financial Supervisory Authority), its operations imply adherence to local and EU laws to avoid legal pitfalls, especially given its public-facing nature and partnerships with prominent players like Binance Labs.
- For U.S. investors, Legion Ventures appears to restrict participation by non-accredited retail investors, likely adhering to U.S. SEC rules like Regulation S (for offshore offerings) or Regulation D (for accredited investors), as is common in the crypto space to avoid unregistered securities offerings. This cautious approach suggests a strategy of regulatory awareness rather than direct oversight by a single authority. However, without explicit statements from Legion Ventures about licenses or regulatory filings, it’s reasonable to infer they operate in a self-regulated manner typical of many Web3 platforms—prioritizing security (e.g., no reported fund management issues) and community trust while adapting to evolving laws.
Conclusion: A 92 year old blocking the way
The biggest barrier to broader community investing remains a 92-year-old rule: the Accredited Investor Rule from the Securities Act of 1933.
Despite a recent broadening of the Accredited Investor definition, accreditation arguably is one of the major injustices of the modern world:
- You got to be rich to become rich
First, Accreditation is based on wealth, not knowledge. The SEC’s definition relies on arbitrary financial criteria — such as a net worth of $1 million or an annual income of $200,000 — rather than actual financial literacy or investment expertise. This outdated standard excludes millions of highly knowledgeable individuals from the highest risk/reward investment opportunities, instead reserving them for people who are already wealthy.
- “The State will protect you”
The Accreditation is essentially patronizing: it cuddles the collective instead of expecting individuals to take responsibility.
This cuddling disproportionately affects younger, educated investors who are essentially barred from an opportunity to make their education pay off by giving them exposure to early-stage ventures.
Perversely, the 401k plans they will contribute to via their early employers will likely invest in VC funds!
Accreditation hence is based on a Government not trusting its own people.
- Members only
By keeping private equity within an exclusive club of already wealthy investors, the Accreditation rule restricts access to wealth-building opportunities for a more broader investor base.
The difference however with a private member club is that Reg D is a club whose membership is decided by Government…
Unless the Trump or any other U.S. Administration broadens or wholesale revises the Accreditation rule, the Web3 dream of democratizing investing will remain a chimera, unless platforms are comfortable with living dangerously.
Continue to Part IV.
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