1/ A proposed framework for what resources crypto VC’s owe the protocols they invest in (in my opinion). AKA, how I would think about building a platform team for a web3 VC shop, focused on translating successful models from web2 into the web3 environment
2/ It’s worth asking why web2 VCs have platform teams to begin with: I’d say there’s two answers:
4/ With this in mind, I’ll outline below my thoughts on what this could look like as a best-in-class crypto-focused operation, and why it’s necessary.
5/ Let’s begin with "good" for web2 portfolio support is. The standard model is one with capability specific teams, where firms bring in top-tier operators across functional areas (S&M, Tech, Hiring, BizOps, M&A) and provide access to these people for guidance, advice + support
6/ Effectively these are outsourced management teams that cover every functional area in a startup. They’ve been in the trenches before, are speaking from a deep bench of experience, and can have in-depth convos with management teams on highly specialized topics.
7/ They advise on everything from “what CRM softwares should I consider using and why” to “how do I find good CXO candidates and how should I structure the interview” to “how can i scale my architecture as we grow globally across a variety of regulatory and technical schemez"
8/ Summarizing:
9/ Let’s apply this framework to web3. The first question to answer is what do protocols / DAOs need? Some thoughts from what i’ve heard from people in the space + my limited experience contributing to DAOs and protocols:
8/ I'd argue one of the biggest issues is getting good legal + accounting advice
9/ There’s two views of the value of these services - on is that you need to pass a “don’t be in violation of law” bar and then the value of this advice diminishes substantially. The other view is “optimizing your legal + accounting strategy puts you at a competitive advantage”
10/ Regardless, we can all agree that you really, really don’t want to be in flagrant violation of the law. Mechanically, this looks like having a top-tier law firm on retainer who knows how to advise on key legal and structuring issues for DAOs, protocols, equity-startups etc.
11/ VCs should have off-the-shelf views on: how to structure the business vs. foundation vs. token-issuing entity, in what jurisdictions, and owned by whom, and what the trade-offs of ALL of these decisions are…
12/ ...drawbacks of issuing tokens vs equity, hiring, wallet and/or bank account mgmt, identifying key legal / regulatory hurdles for your specific crypto vertical. All the nitty gritty stuff that’s easy to gloss over / punt, but that can rek you down the road if mismanaged.
13/ Second item i’ll call out is UI / UX. Good branding, both visuals and story telling, draws in a community - hard stop. And an easy, clean, usable interface keeps them there. Having top-tier UI / UX resoures, whether they're web2 or crypto-native, is a valuable resource.
14/ VCs should pair this with an experienced community manager on staff. Someone who’s been in the Discord and Telegram moderator trenches and can help you think through community engagement and management, and how to grow and architect your social infrastructure successfully.
15/ These aren’t delegated as cleanly into “marketing” and “sales.” Rather, I’d think of them as brand and community management. VCs should likely also be active in the community to some extent, but regardless should have a set of experienced operators to make available.
16/ These teams should also have a product + tech arm. In my mind, this takes a couple different forms. It doesn’t hurt to have an off-the-shelf code library you maintain and update, and let your investments tap into (or just make it open source!)
17/ Having an ex-auditor or someone familiar with smart contract development AND security is also a huge plus.
18/ As protocols scale, they often face long wait times for audits and may never get access to a strong security resource who can give them bespoke, custom advice that isn’t prohibitively expensive. VCs can be the bridge to this hugely helpful lever.
19/ This brings us to a less concrete but immensely helpful category - hiring. Everyone in web3 is hiring, always. Having access to talent pools, especially technical talent pools, that you can give protocols access to is huge alpha, and is a massive value lever VCs can offer
20/ Final category - relationships. Protocols need intros to customers, other protocols for partnerships / integration, service providers, and generally smart people in the community who can help / advise. Being the connective tissue that facilitates these intros is a huge plus
21/ Tying it all together, crypto is a community effort, and while VCs play a part in developing and growing these communities, many would agree this interaction should be a two way street. Put simply, VCs should give as much as they take.
22/ Will be interesting to see how the platform support side of the world evolves as the space itself matures. Thanks for reading! As always happy to discuss further.