Decentralized venture capital is a new venture fundraising and investing model that allows non-accredited investors to invest in promising startups around the globe. The benefit of this is that the entire investment process – from origination and screening through due diligence and negotiation – happens upfront before the final investment begins.
his method protects the interests of the DVC platform's investors by allowing them to make informed decisions about who gets funded and who does not, based on a thorough knowledge of each company's business plan.
Furthermore, exciting startups looking for more than just financial investment can tap into a distribution network and community of early adopters who can provide feedback on a startup's products and services.
A key differentiator worth noting is that smaller early-stage DVC firms can thrive within this environment without being competitive with the larger DVC firms. Large, well-capitalized VC firms often shut out small startup VC firms from participating in lucrative deals in traditional venture capital.
Today, thanks to the blockchain, anyone can become a venture capitalist and raise capital from an army of individual investors around the globe.
At BEE Capital, we have been refining the DVC model for investing in crypto startups over the past few months, and the ability to tokenize securities is another key difference between decentralized VCs and traditional VCs. Tokenization allows investors to enjoy all or part of the liquidity of their traditionally illiquid investments. Once an asset is tokenized and can be traded on an exchange, investors can realize gains early and liquidate positions as needed without waiting for the liquidity events that typically occur after long-term holdings of traditional venture capital.
In conclusion, decentralized venture capital is the way of the future. Traditionally, investing has been a zero-sum game. If someone wins, everyone else loses. That's why many say the system is "rigged" in favor of venture capitalists. However, thanks to blockchain, we can build a fair and just world by eliminating middlemen and democratizing opportunities.