as the crypto As the market continues to plummet, founders struggle in the space to retain investors who are now trying to minimize their risk and pull out of funding rounds.
This week, the global crypto market cap fell below $1 trillion for the first time since January 2021. While many companies prepare for a potential recession, founders building crypto startups are still trying to raise money amid the market chaos.
Earlier this month, a number of investors told Marketingwithanoy that a valuation reset was underway and that now is “the time to buy” as the market shifts into a VC-friendly landscape. But not every founder is happy with the way they’re being treated now that investors are back in the driver’s seat.
“Won’t name names, but there are a number of VC companies that play games with founders when it comes to fundraising,” said Imran Khan, a core contributor for the DAO and web3 accelerator Alliance, tweeted† “It turns out that investors are ghosting and/or forcing founders to give up more. When founders invite investors, it should be considered a privilege, not a sale agreement.”
Two web3 startup founders who spoke to Marketingwithanoy on the condition of anonymity said that VC firms that didn’t stick to their words cost them time, money and more.
“Unless you [crypto] project is getting good traction, no one is getting a valuation above $30 million right now.” Founder of a web3 gaming platform
“We started raising about two and a half months ago, when the markets were rosy and things were going well,” said the founder of an NFT-focused startup. “We got commitments, and then clearly the market collapsed after the… [Terra/LUNA] situation.”
The founder said that a traditional VC investor bought him a fancy beachside lunch during the Bitcoin Miami conference in April to persuade him to admit him into the company’s financing round. “After lunch, he promised a $250,000 investment, and when he discovered the other investors… [in the round], he raised to $500,000. He then changed his mind after the UST Terra crash.”
“Then I started thinking, what does commitment actually mean to them? When you’re committed, you understand that you’re going through tough times and good times,” said the founder.