I’m a former founder and current crypto operator. I’ve raised money from some of the funds @0xMaki helpfully brought to the table, invested alongside another few and spent time with at least 3 or 4 the GPs I expect will actually get involved with Sushi after the USDC hits.
Here’s some real talk:
I think this raise is a good idea. The basic reason is that, if you raise from the right VCs, they’ll fucking fight for you, and that’s worth a ton.
If you raise from the wrong VCs, they’ll do fuck-all for you, be a pain in the ass, and then dump ASAP.
^^^ @SBF nailed it here. What you want to do as a project leader is fill your cap table with the collection of VCs who will provide the things you need.
That can be intros to portfolio companies, recruiting support, regulatory guidance or just a shoulder to cry on.
What it is NOT is money.
What it also is NOT is 21 VCs who all do the same thing. And don’t have much skin in the game.
For example, Amy Tong Wu may be an enormous value add. But Lightspeed just raised a $4 billion fund. How much can she actually justify devoting time and resources to Sushi … if her check size is only $3m?
Now imagine having 21 clones of her … all doing almost the exact same thing!
(Sorry Amy! I am only singling you out because of you happened to post first! I actually think you are probably lovely!)
A better path forward
Based on this reasoning, I suggest we consider doing the following:
1. Retain a reasonable size treasury sale, but reduce the number of big VCs in the round. This has two key effects: it gives each VC more skin in the game and it makes it easier for each GP involved to justify devoting additional time and resources from her or his fund to the project.
Remember. Each GP supports a portfolio of companies. We will never be the biggest or the hottest - except now!
2. Choose each VC based on a specific contribution that we want. This is like arming yourself for an expedition. What do you really want? 5 crossbows but no boots or food?
Hell no! You want what you need to survive - crossbows, a battle axe, food, water, tents. So we should use this moment to get all the supplies we need!
3. Bring in a bunch of little guys who will have outsized incentives and power to help us…for very small allocations. This is the flip side of the skin in the game problem.
For only $5m, you can bring in 50-100 strategic angels who will do all sorts of high-value-add tasks for you from post great memes to get a dev out of jail. Again, however the challenge is selecting the right ones. You do not want 50 CMS interns! But ROI from getting a healthy collection of angels? Enormous because the incentives are so strong.
- Keep the fundraise size large
- Cut the number of VCs to improve incentives
- Optimize our portfolio of VCs - now is the time to arm ourselves to win!
- Create an angel tranche to get outsized returns while giving up very few tokens