Immediate logistics aside, there seem to be a few major themes that can be summarized, expanded, and compromised into a milestone for these discussions.
@0x_chu and I dive into some of these topics during the kickoff AMA: Sushi Phantom Troupe Episode 1 - YouTube
Firstly, why VCs and are there alternatives? What is the definition of strategic? Why now?
Originally the definition of strategic was somewhat vague and I offered up some preliminary definitions here: Sushi Phantom Troupe - Strategic Raise - #37 by OmakaseBar
@amywu from Lightspeed took the first leap to start to address some of those definitions here: Sushi Phantom Troupe - Strategic Raise - #50 by amywu
The discussions in both this forum and sushiForum call have given more precision that can align with the growth and direction of Sushi as a whole. But to really understand what will be strategic for Sushi, we need to first consider where Sushi is going and the vision.
Welcome home to DeFi, start your home here
Having such an expansive community has driven both a vertical and horizontal expansion on both protocol and product development. Sushi has evolved from specifically an AMM to an ecosystem. Some thoughts and former discussions regarding this movement can be found in previous AMAs here: Onsen AMA Series - YouTube
Sushi is at an inflection point. Having built up a vast array of primitives we must now consolidate those efforts into comprehensive, streamlined product offerings. Sushi must rapidly consolidate to become the best place for 100% projects to launch, maintain and grow. This will continuously capture the 1% of high volume producing projects. We will continue to integrate every available feature of traditional finance on decentralized infrastructure to empower projects. As projects grow, we grow, xSUSHI holders grow. An example of this mission are upcoming token pages that consolidate these features:
Boris Wertz, founding partner of Version One Ventures, was derided on CT for alluding Uniswap to Ebay: “It’s like eBay. If you want to sell something, you can list it.” He wasn’t off the mark, tokenized marketplaces are key to enabling economic growth, rather his vision was too narrow. Why stop at selling - unlocking all every feature of decentralized finance for every token is an entire order of magnitude more impactful and Sushi is much better positioned today to become the lead marketplace for tokens through empowerment: swap, lend, borrow, leverage, launch, incentivize, hedge all in one place.
And as Sushi expands and projects continuously choose to launch on the ecosystem - we have the opportunity to set standards in DeFi. Standards are important to give definitions to a largely new and undefined space - legal, infrastructure, product will all be necessary to promote standards that will be used across industry. More detailed thoughts on this during AMA (be there!).
Strategic in the immediate sense will require our partners to not only support continuous deal flow and onboarding of new projects that leverage our ecosystem, but also promote a more comprehensive Sushi to larger audiences outside the immediate DeFi niche. There are incredible and constructive opportunities to bring Sushi to not only traditional finance, but traditional industries as well. Treasury management and operational expansion will also be necessary for heightened sophistication and partners with strong experience in capital markets will be key to offer guidance in this regard. Additionally key partners will work with Sushi to craft and solidify standards along infrastructural, legal, and product dimensions. There are few partners who have had experience in defining industry standards for new technologies and organizations and these insights will be necessary. Therefore current strategic definitions do favor more traditional and more experienced firms - seeking alignment, as this raise is by no means traditional, will be the next step. Notice the use of “firm” as opposed to “venture capital” specifically, the community has raised good points that these skill sets could be found in other organizations or in complementary fashion that should participate in the round.
Secondly, SBF revealed an important insight regarding institutional network effects of fundraising from venture capital firms (The Sushi Forum Episode 38 - YouTube) . Having network effects matter, Sushi is a testament to that in the DeFi space. Establishing network effects amongst the VC space will enable Sushi to compete effectively on an institutional level. Again the strategic firms need not be exclusively venture capitalists - therefore we also feel there is an opportunity for engagement from dedicated angel investors. Many early angels in Sushi’s trajectory have provided clear outsized returns in terms of branding, design, and entering new markets - these participants should also not be discounted.
Diversification provides optionality. Utilizing this strategic raise properly can both onboard strategic partners at the same time that it hedges the risk of having a treasury composed largely of SUSHI. Converting 20m (~16% of the developer’s treasury) to USDC alleviates potential downside risks of market volatility. Treasury management and advisory are key to a growing organization.
Expansion beyond DeFi. We also want to onboard strategic partners who can help us bring Sushi to the “real world,” and bring the real world Sushi. This has to do with our understanding of the role of a strategic partner, which is outlined in the following points.
Advancing the ecosystem: Sushi’s vision has matured since its inception, and we are no longer just an AMM. We have evolved into an entire ecosystem, servicing users in DeFi and beyond, tackling issues at different centers, involving both retail and institutions. The same can be said for our core team and operations, which require diversified resources for continued development. Onboarding strategic parterns will also help us in the following critical areas.
These critical areas include:
Legal and regulatory assistance from the traditional actors
Hiring a legal department to support us on potential legal challenges is easier said than done. Partnering with strategic investors who have their own legal departments, who are exposed to different niche areas, and who are involved outside of the crypto space would be a tremendous help to us.
Increasing deal flow and partnerships
Sushi is at inflection point where various features will be consolidate into a comprehensive offering that can effectively compete with the experience of web2. Building up partnerships now to leverage our features as we target larger markets will be key. Strategic partnerships can help us expand a broader audience with a retail-friendly and a user-friendly interface, as well as creating an increase of deal flow and new channels to reach those users.
- Strategic positioning can help bring in more MCV2 and BentoBox integrations to reduce SUSHI emissions.
- Other specific areas in need of institutional backers: MISO, protocol integrations that haven’t been released.
Branding and awareness building
The correct positioning in an emerging market can be incredibly valuable. Strategic partners who share our vision can help us align our brand with new users, and more generally, they can help expand the use-cases for DeFi in the traditional market.
Tokenomics and governance
The prospect of a facilitated expansion into new markets entails an increase in Sushi’s value, which would lead to outsized returns on emissions.
Our partners will be actively involved in the governance of the protocol, and active governance leads to more effective development.