Funding the Future through Founders | Panel | ETHDam 2024

[Music] and so for the very last panel of etham we've invited some people some of them local some of them part of larger uh uh organizations so to say to come and have a discussion about funding in the blockchain space so if this is interesting for you which I'm assuming as you're sitting here it is is then please ask questions and engage and uh to kick this off what I'd like to do is invite Robert to the stage the moderator and let's give him a round of [Applause] applause yes yes it works okay thank you uh thank you for coming here today um as JJ mentioned uh we're here today we're we're talking about privacy all of this conference uh we're talking about new projects being built but you need resources you need support and you need Outreach um with that I'd like to introduce uh our speakers for today and call them forward please um Renee um Aon Pim we have for you [Applause] today we have uh three VCS for you who were able to join us to talk about what uh what they're doing in the state of the market what they're looking for but also what you should be looking for um with us today we have Aaron van amers CTO of outlier Adventures hello we have Renee darmos managing partner of moonh Hill Capital hello everyone and we have pinart U principal at Maven 11 I'm going to sit with you and I'm going to ask you guys give you a moment to explain um a bit what your fund does and how you differentiate from each other I'd like to start with you Pim on that side thank you um yeah Pim I work at Maven 11 we are an Amsterdam based fund um maybe that's differentiating I don't think there are many Dutch Venture firms in the space um we've been around since 2015 so also one of the names I think that has been around a little bit longer um have been mostly focused on infrastructure Investments but have also done defi Investments along the way um and I think generally have built a strong thesis around modular change um so we're seeing that come to fruition obviously we've seen Celestia launch a few months ago U we're seeing now the sort of L2 Centric road map of ethereum and um yeah I think that's sort of the the key directions we've been investing in and we mostly invest in early stage um Ventures but we can also do later stage I think that covers a lot at least thank you Pim Rene so we like a moonhill capital we arise from the community we have managed together and um and nurture the biggest and most active web investors Community out of Slovakia and czechia where I'm from uh the community is called bit coach we started investing in 17 already we had nice investment like SE round with chaining pul the double1 engine some others but back then we didn't have any any legal entity it was just pure Wild West copy pasting transaction into one shared Google sheet it was a really nice time back then but yeah but uh then in 2021 we established moonhill capital and since then we invested most into defi infrastructure projects still we're doing infrastructure but already now looking a lot into application because there's too much infra being built for non-existent applications teams and we'll try to be as early as possible um the ideal stage we like as I usually see it our investing investing starting at 50k but we don't like that much and we are able to go up to 500k a young founder in the audience here um Aaron please about outlier all right yeah I'm Aaron uh CTO and founding partner of outlier ventes since uh since 2014 um actually we're not a VC and we're not a fun fund so that's great but we're an accelerator so it's very uh yeah similar to what what a VC is um so we're the number one uh accelerator in web 3 we're on three cohorts every quarter um usually with Partners we've partnered with uh previously with with polygon PKA do filecoin um many other uh uh plays in in the ecosystem as well as more industry focused uh uh Partnerships with like of farfetch um and the Walmart we have a a coort with and uh and others um we we like to run thematic coords so we're now uh recruiting for our Q2 in um a deepin program a reward assets program and uh the AI crypto program we're really really looking at that overlap of AI crypto which we're we're happy to see that the market now takes on we've been shouting this from the rooftops uh for a while but now it's yeah great to see that people see that AI needs crypto and crypto needs AI um yeah our stage would be like even earlier than yours usually I'd say you know pre preed um uh some Founders good idea some some some basic uh product some basic traction um and uh yeah we get over 5,000 applications a year uh below 2% acceptance rate so we get to see a lot of the market early on um and uh yeah of course with you know uh we we want to make uh teams as ready as they can be for uh funding rounds and finding investors so we yeah we cultivate our investor uh uh Network um and um yeah H have a view of the market in that sense um as well thank you and I've actually um come around a one of your portfolio companies which we met yesterday at this conference uh her uh we there's one of Founders is here her from plurality she actually went through one of the uh programs here what was your experience in this program from outlier give you mic hear you thank you Adan so um just like many people here we also went to a lot of hackathons last year won a couple of them and then somebody from outly adventur contacted us and uh we were in their accelerator program funny thing we just graduated 2 days ago uh so like perfect timing I would say the accelerator was like the perfect choice for us because um we were three technical co-founders uh and when we started this like we knew all about the technology and stuff so I've been working as a blockchain architect for a couple of years now in deuta Telecom and I thought like you know I'm an architect I I I know this stuff I can do it but when we got into this accelerator surprise surprise there's so much that goes into like making a startup really start that uh not no one person can know it all so like there's legal there's technical there's marketing there's brand placement there's your pitch there's your value proposition there's your business plan tokenization model and like the first few weeks were like we were like B okay this is probably too much we cannot do it but as the weeks went by one by one by one we tackled so many things that now I when I look back for the last three months I think we have covered more more the more than an Year's worth of progress in just 3 months and um yeah that was like I I I I would definitely recommend outli Ventures accelerator to anyone who can get a place there the one thing that I really really liked was that um like maybe many of you here have seen me with a small baby I'm the woman with the tiny baby going on around this conference and uh I told outl Adventures like right from the start I have a small baby it could be like that I might attend a few sessions with her and they were were so accepting and I actually did that and everyone there was like super made me feel super super comfortable and I think that's that's that's what we all need to do because like probably I can't see a single woman here oh maybe one or two or three yeah okay so like that's we we're like less than 5% and if um we don't get that kind of support then I think these four or five or six women would also just go away so I think outlier is too doing their part maybe the other VCS like maybe uh try to give wom families a bit more chance as well so yeah thank [Applause] you thanks so much here and thanks Robert I mean I have to say to everyone this was I this was not my idea to ask somebody to talk about outli but yeah thanks so much it's always good to hear from an actual founder who went through a program having said that of course um you guys of course Renee Pim um you also offer support for founders of course of course Beyond just funding um and that's actually what I wanted to ask and then we'll also jump into the questions by the audience as well could you describe it the role of a VC in this day and age um from your perspective Beyond just the money basically yeah um I think it very much depends what sort of fund you work with um and also as a Founder what you're looking for um there's a very opposing views here I uh there's a slow VC it's an American fund they have this thesis we hate value adding because their whole point is we are a venture capital fund we don't know about being an operator basically right you are the founder you have domain expertise you sort of know what you're doing in that sense we know how to raise funds and we can help you raise funds and that's sort of our core expertise um that's not how we like to operate but I can see that that's like a a valid way to sort of approach the market basically you focus on what you are really good at and we focus we on what basically we are really good at and that's the the single thing that we will try to help you out with um I think in crypto most funds will operate slightly differently um I think funds to some extent will always try to at least portray themselves as being a value add investor so definitely you know try to add some value to the portfolio companies you have um I think for us the whole thesis for how we want to work with portfolio companies is typically looking at what sort of the the core muscle that they have that we don't have have to work out for them and what are the things that they don't do well that you know we can really help out with um and I think in our portfolio and sort of our investment strategy along the way we very often backed highly technical Founders um technical people are typically a very sort of you know one size fits all um uh profile as a person so um they very much excel in a few topics and they also don't excel in a bunch of other things um and I think we always like to help build out all of the basically the weaknesses and attack all of the problems that are around this sort of the core technical problem that they are solving or the competency that they have in that domain so you know very simple stuff like hiring um like raising additional funding um marketing stuff uh these sorts of things obviously we've you know in house we've built a very deep technical uh sort of knowledge base as well around how blockchains work and like we regularly publish research like this but ultimately you know that's also that's only sometimes uh a value ad and I think the the more consistent value ad is very much all of these processes that are around um sort of the the building of the uh of the company growing the organization as well yeah I would maybe just add that um the first case you just mentioned that no value ad uh for this kind of wises there's a chance to invest uh during bare Market because uh during bull market that's like those 8year projects like they are over subscribed just like that they are pretty pretty quickly over subscribe and it's just um according to your value ad if you are able to get into the round right it's very competitive space like being VC especially during these times let's say it's quite competitive so the more value add you are able to bring the the better it is for the project and uh that's what we are also doing a lot and uh we are trying to focus on what you just have mentioned uh it every team is and every project is different and uh some of the Founders are more technical some of them are more business development oriented and then our our role is to try to search for that weaker parts and try to help them in those weaker Parts because why should we work on something what the project and Founders are great at right they are probably much better than we are our role is to help them in something what they are not good at to connect them especially with someone who is professional in that space because that's what the all the VCS are having they are having great Network great connections and one more thing is that we already have seen the best uh cases uh best scenarios how how projects and Founders should operate how they should extract the value from um from whatever activities they are able to do and we just can advise them to do this um it's obviously all the time on the project if they want to do this um I think value um value ad is very much needed from from VC perspective oh we have just because just got an example from you guys of course so um I was interested because the um the questions are already coming in I see for those who don't know of course we're using slido.com if you use the code ethd you can pop in your own questions um for the gentleman here um if you if you'd like to pitch please do so after the session you can do you can find them one-onone here around um but if you have a question about um raising capital or uh choosing for or not for a VC then please do um I see some early ones already coming in can you name one um crypto meets AI application that's live and creates real value I know you guys invested in fetch right true yeah yeah we we were ear early investor in in fettis actually uh before we uh uh started our accelerator model but in a very similar way we work with them from you know a very early stage um to you know becoming what they what they are now um I would say you know fetch is is one of more the more advanced in the market uh but you know clearly they're not as as uh something like that you can point to as you know an open AI where what's what's open eyes product well it's chat GPT it's over there it there an API there um fetch does have you know services that they uh that they offer and work with with Enterprise on they have you know their uh agent toolkits they have the the Delta V format so they they do have you know all of those things in the market and increasingly people are are building on them but I would say in fact like you know many other uh projects in the The Wider crypto space um there it's like it's relatively early compared to you know uh uh Web Two models but um but definitely uh yeah much more materializing now they've definitely you know found found fit now in in Beyond where they were in 2020 21 R yeah I would like to um not that long time ago uh I just put one tweet that is describing this space uh really nicely uh don't get me wrong but it was written like uh um look at the bit tenser like they are really not solving anything right now but they are having few hundreds of millions and ultimately they will be able to hire the best people in the world and to find out like what they are going to to to be looking at right so um that's more or less actual stage of the AI and crypto I would say maybe you have different opinion but from our point of view we have invested into ioned and exibits and those were our first bets on AI it's more like deep in space but we found it like the best AI bet for us yeah I think that the question is already pretty pointed uh in the sense that obviously a bunch of this is very fluffy and vaporware um um but I do think there's some overlap of the domains of crypto and AI where I think we'll see interesting uh developments I think right now the the lightest way in which this is somewhat fruitful um something like an Akash for instance right I don't know if you want to call it like a deepin network but you know decentralized training or decentralized inference basically just using crypto as the sort of permissionless um you know incentive alignment uh payment layer to conect you know someone that has Hardware with somebody that wants Hardware right ultimately boiling down what what these sorts of marketplaces are there's some there's something there um whether they uh deserve the valuations that they are currently trading at in the market now that's I think a second question um but I think there these are you know ultimately platforms that are already providing real world value um but you know first point I made I think still stands this is still very very speculative most of it um but you know I do think there will be some some interesting developments there um I'd like to hop on to a question which popped in um the question was what makes a successful founder uh so from your perspective um you get a lot of decks of course uh a lot of propositions what are in your case green flags or red flags when looking at uh proposals I mean I can hop into that um like of course we get a lot of uh found different Founders or aspiring Founders to who apply I would say um uh mental like your character and attitude is ultimately one of the most important factors because like your uh your experience and your skills Etc you can you can augment those um and uh people you can gather around you but you can only gather them around you if you have you know that attitude if you have the ability to to attract people if you have the ability to to word your vision to to communicate it um and be be flexible and determined to you know like like er said like it's it's this is quite quite common I would in fact you know if anyone goes through our accelerator and does not have that moment of whoa this is really too much I would you know be a bit worried because almost everyone goes you know goes through that it's so much that comes at you and the ones that are successful are the ones that you know are resilient and are flexible to see well this what comes at me is really something that I uh that should be a pivot that should that should be a big change and this other thing that comes at me is something where I need to just overcome it and go in the same direction and it's an obstacle I need to overcome so that yeah mental flexibility and resilience i' say is uh a really important characteristic I completely agree with what with everything what you just have said and um I think this is very complex topic we we did like two months ago or something like this but published an article on our subst where we describe like what uh what are the points where we are looking at during our due diligence um there are many of them but obviously the team and Founders is the the the most crucial part of it because we are investing in early stage uh of projects and the team is at that point crucial because sometimes it happens that the the project Vision doesn't turn out to be the the best one but the the the project on and the team they are able to Pivot into something um a little bit different uh but still being very successful but uh like you just mentioned they need to be flexible enough they on one hand they they they need to to have the vision where they are heading but then being flexible enough to listen also because we had experience that there was a Founder who didn't want to listen he he he felt that he is he knows the best what he's doing right and usually it's like that but not in every area and when there are already more people and more VCS telling you that this can backfire to you then you need founder to be able to listen to you right and that doesn't it can be really huge red flag we experienced this already yeah I think in general the biggest green flag we've seen with Founders that have done really well is that they're just generally like nice people uh I think when you sort of boil down what you guys mentioned like the people that we work best with are the people that we just like working with um so I don't think there's you know if if you're a highly technical founder then the green flag is that he's very technical right and if you're massively Savvy business founder then being massively Savvy in business is like your green flag but I think that the sort of below the surface it's really like how how How likely do you want to work with this person um if we have a first call with somebody camera off sort of short answers kind of you know uninterested then I'm already 100% sure is never going to work out as a relationship so then that's the red flag um and the opposite the green flag I think of all the founders that we've seen succeed are is basically Founders that are you know really nice to work with from from basically all angles um yeah and you know also just a Founder that is willing as you mentioned um you know admitting that you don't know certain things um admitting that you aren't uh you know good at everything ad meaning that you need help from people that you hire around you or that you collect around you um but in general I think the main thing is actually finding you know just being a generally nice person to work with I think that's honestly been the biggest success indicator for us okay thank you we are we're getting quite some questions in uh let's go through let's take the top one I need to raise and I don't have a company neither a token I'm assuming there's a product there many VCS and angels has to invest but we are stuck there what can I do do you guys also support with the setup of the whole structure for Investments for instance yeah we have done this before we've provided loans for instance for people to incorporate but I don't think that's a very typical thing an incorporation is ultimately not the biggest hurdle so if you have a product then you should probably build somewhat of a corporate structure around this um a token isn't a requirement I think well some VCS will see that as a requirement uh because obviously there's some benefits to having a token um but yeah I mean an investor ultimately has to wire money somewhere and get like a formal piece of ownership somewhere whether that's a portion of a network that they purchase or you know a piece of equity so if you only have a product then I would highly recommend starting at Step Zero which is maybe incorporating or something yeah that's one that's one thing and maybe also uh the important thing from our point of view is to find some uh lead investor because the this lead investor they are able to help you with all this uh not only basic stuff but with everything with the valuation with toen economics and with other questions and also other VCS uh will be much more tempted to to enter the round when there is already some lead investor who is kind of like proving the quality and that they did double check already everything yeah so first venes this is much more common case because we we do get like it's one of the things you as are you incorporated or not and you know in quite a few cases they aren't but then we you know help them with with all of that including like where to incorporate how to incorporate but uh I agree like you need you need somewhere to send the check to and you need you know confidence about certain cap table and ownership that's there so yeah I need that and get on the way there's one question which came in which um it's not the highest rate at the moment but I would like to touch upon it there was a question about uh red or green flags for Founders what are the red or green flags about VCS if you're as a Founder searching for support what should you be aware of when talking with you guys um very much depends on what you're looking for out of your fund I guess um if you are one of these people that are sort of hellbent on I I have this direction in my head I know how I want to build this company I know where I'm going to take it I just need money so I need you to wire and basically off um then that's the sort of VC you should be looking for and at that point a sort of you know helicopter parent VC is not going to be a great fit for you so I think it's you first have to figure out what sort of fund are you looking for and what are you really looking for out of this fund um and then finding that there's a bunch of very common sort of red flags that are like easy you know if a fund is pushing you to launch a token as soon as you can without a product um you know I would argue that's probably not the greatest sign and there's a bunch of very lwh hanging fruit red flags but I think really you should be focusing on like what are you actually looking for out of a fund and you know who can actually offer me this yeah I to add to that there's a bit of uh an AB and flow in the market as uh right now it's it's almost doing the founders doing DD on the VCS whereas you know in in bare markets is more the VC is doing the DD on the founder but it's always Mutual so um indeed look at like and speak to others who've been funded like ideally a while ago and well how was this VC like how was the relationship what did they do how did it work out were they friendly people uh where they humans um all of these things and um and and first and foremost like be aware that there are all those things that there are different VCS that one might you know never respond after just wiring your money and others might be very eager to help you um and then you know go go around your uh your journey um with funding your startup I agree basically with everything that has been said and um then there are maybe also other other smaller aspects not that um maybe as important as this but uh there are some V that are having already communities then maybe for your projects can be a little bit better to have a venture da for example like a like an investor because there are like many experts for um each category maybe maybe it's like you just said you need to know your objectives okay so if you guys I mean obviously chance of course if you guys agree and just that's fine then we can just continue because we got a lot of question coming in actually let's move on yes uh would you invest in a defi app on a relatively small layer one chain it's a very difficult to answer question yeah um I guess maybe but I think the the first question I would ask is why are you wanting to be on a very small L1 chain like what what is this L1 chain giving you that any big L1 chain isn't giving you um ultimately it seems like tapping into the ecosystems of bigger l1s where there's a lot of users a lot of liquidity Etc like basically onboarding users into whatever you are doing seems typically easier um if you have a great reason why you want to be on a very small L1 then I would love to hear it and then we can sort of debate the merits of that but um yeah in general I would say uh potentially maybe question mark yeah I mean we have in the past like the answer the answer to that question is usually well we started two years ago and then it didn't look so small at that time but now you compared to the others L one is small um like the the ultimately you want to see where is this going to grow like in what way and maybe you know that startup can convince you look this L1 is now really small but they're doing all these things we realize that effectively this is BET on this L1 too but you know invest in us and you you'll grow with it you know that might be a convincing case or it might be well now we will go multichain but then specifically to these because you know saying we're going multi chain that's you know also it's almost like choosing your chain is almost the same kind of uh consideration as choosing your VC you're buying into an ecosystem you're buying into you know something that can support you or not be very successful so uh in summary potentially yes but depending on you know the whole wider context of the potential really yeah I completely agree we already have invested in such projects uh we already have decline such project it completely depends which change will you see lose interest from Builders this year from your perspective in the market ones that are running out of money maybe no I I I don't know if there's any like there's clearly I think a concentration as I just mentioned of like liquidity and users around some of the bigger chains that's just got a sort of positive like reinforcing feedback loop um so I think smaller l1s will maybe struggle but at the same time this is also as a as Aaron mentioned there's this EB and flow of like what the market is doing ultimately when you know crypto prices Balloon by a 10x that means that every ecosystem suddenly has 10x the amount of money to basically give away and incentivize Builders with and so in a bull market you can see basically every chain you know raising money for these like ecosystem funds and um getting somewhat of a I don't want to call it organic but like maybe slightly inorganic ecosystem going um I think you know so the question is basically which ones are going to die right now I don't think any will die right now in fact I think many will come back to life it's more once you know prices start to shrink again as they always do 99% and then another 99% which ones then are left and then I think a bunch of the sort of you know very interchangeable alt l1s will will evaporate because they just you know the block space that basically they sell isn't very differentiated from other block space um but you know I think it's more of a sort of bare Market question which ones will uh uh will cease to be rather than a question of which ones will now cease to be because it's ultimately a function of the amount of capital that can be dispersed I think we have one minute left maybe I would just say where I would like to see these uh Builders going away from these chains like there are still too many builders on pad I got the feeling that there are more Builders than users right uh um then cardano obviously and then some others but these are two from the top of my head yeah I mean I'm not going to add names to that but uh yeah the the the concept of uh if if your only differentiation is you know a fast 3vm then you're in the end probably not going to make it um uh but uh so the the I think that's that's one big conclusion of the whole L2 story like three four years ago ago there was you know only one two change that you could really build on now there are five six seven that are all mature that all allow you to roll out your own chain um so there needs to be much more behind it to uh for people to make that um commitment and and the ones that aren't that you know they're probably not going to make it we are uh at time i' would like to ask each of you in one sentence if you could give an advice to a Founder in the room uh who who wants to raise in this market right now what would your advice be in one sentence each of VI I think you already gave the advice like if you do have a product that is in somewhat of like a raisable state let's say then this is the market to do it because it's clearly a Founders market and not a funders market right now um it's already been mentioned a few times but ultimately right now VCS are typically unless you're very differentiated they're having to scramble um and scrap to basically get into funding rounds which means that valuations are being driven up which as a means you are selling a smaller portion of the company that you're ultimately going to build and you're raising more cash for that small company uh for that small portion that you're selling so I think that's the advice really you have to be somewhat realistic about how these fundraising timelines work and very opportunistically this is the moment to to raise money granted that you have a product that like you know is in a somewhat of a raisable state yeah I completely agree that the time is now so what you need to do is to hustle right not in half a year but hust now work seven days a week 14 hours a day you have like let's say we are having one year of BU Market maybe maybe a little bit longer probably a little bit shorter so the time will not be done now you need to raise money and and just to talk to as many VCS as you are possible talk to Scouts talk to people who are having access to to Capital and uh ask for their feedbacks ask why why why and try to be pushy and then ultimately the the the life and this ways will lead you to someone who will be convinced about investment in your project all right those were very long one sentences I'll try yes just add that like yeah I mean agree like may make hay while the the sun is shining um so do all of those things but also be aware that you know raising 25 million at a 200 million valuation is it also comes with other sides it comes with expectations and it comes with the burden the market will change and you know don't invent a token just because you have to and because people are pushing you to um invent the token because it makes sense in your product and your vision uh and it adds value and then you know now is a really good time to uh to yeah relay the start of realizing that Vision in funding thank you again gentlemen um give them a round of applause guys [Music]