In this March Funding Special, we take an unadorned approach to fundraising.We cover both Web2 and Web3 ways of raising capital, from SAFEs to token fair launches and everything in between. We also look at some platforms that claim to facilitate your raise, and conclude with self-financed models as a possible third way. We end with an update about what our dev desk is working on.
We hope our four-part special helps you get the funding you deserve!
Han, Founder and CEO
MARCH SPECIAL
Eyes Wide Open
Any project that looks to raise outside funding is essentially buying time until capital comes from its customers. Without funding, your startup is a hustle. With funding, it becomes a gamble.
Other people will let you gamble with their money, but at a price.
Venture Capital historically provided the fuel for most Web2 ventures by skewing the economic upside in its favor and seeking control.
ICOs sought to decentralize capital, but lead to the total abandon of any form of accountability, instead leading to sudden wealth that discouraged project leads from building for the long term and turning investors into frequent traders instead of providers of patient capital.
Hybrid models seeking to synthesize the VC thesis with its Web3 antithesis often resulted in investors double dipping in both equity and tokens without fundamentally changing the users = owners equation.
From SAFEs to token fair launches and everything in between
In this March Funding Special, we cover both Web2 and Web3 ways of raising capital, from SAFEs to token fair launches and everything in between.
Part I. Raising without romance: A matter-of-fact guide to equity capital
In Part I, we start with the VC process, still the predominant source of funding for technology projects.
We dissect the standard terms in Simple Agreements for Future Equity instruments (SAFEs) and Token Warrants, and also examine the typical term sheet of a priced round, locating the boobytraps and demystifying the terms they’re hidden under.
Part II. How to raise from the community in an unscammy way
In Part II we move to an alternative to raising from VC, starting with the cold shower that regs are stacked against the ideal of making owners of your very users.
We start with a discussion on DIY token sales, running through the whole gamut of acronyms, from ICOs and IEOs to IDOs and INOs.
We conclude Part II by talking stock of where this alphabet soup has lead us at the time of writing (February 2025).
Part III: Compliant collective investing: Angel, Echo, Fairmint, Legion and the likes
In Part III, we then look at platforms such as Angel, Echo and Fairmint as tools to help you raise from the broadest possible set of contributors without becoming an outlaw.
We discover they can only really innovate at the margins as a result of restrictive offering regs, which we wish away at the end of this part.
Part IV. Free solo: Going the self-financed route
In the last part of our Fundraise Special, we look at a possible third and arguably hardest way: growing your business out of its own revenue.
We ask what business models lend themselves best to grow out of their own revenue and what solutions are out there to help you bridge working capital shortfalls.
We conclude with a predication that ever more businesses, thanks to the power-law boost in productivity from AI and the free availability of blockchains as a public good, will self-finance and grow to 100MM ARR with less than 10 people.
FROM THE OTONOMOS DEVELOPMENT DESK
Progress on our specialized AI
Over the years, Otonomos has built a deep repository of knowledge about jurisdictions, company formation and corporate actions, from how to increase capital to the use of nominees etc.
Instead of locking this knowledge up behind a paywall, in March we are set to release our new Otonomos sidekick, a specialized AI that lets users prompt for answers to their most frequently asked questions.
The next evolution is for your Otonomos AI Agent to help with the incorporation and maintenance of all the entities you ordered from us, eventually putting an army of AI Agents at your fingertips to perform most of the task you'd ask a human corporate secretary to do.
Expect the April Otonomist in your inbox end of March, brimming with human-authored contents about how and from where to build in Web3 and AI.
