I like to use that term above a lot, VC = Venture Capital. Following is the accepted definition from Wikipedia. The allure of VC from an investor point of view is to get into an investment at the ground floor. Nuture it, see it grow and have some amount of say in the growth of the technology or company. If you are correct, you don't have to pick a particular stock before it rallies. By definition you are already in when rest of the public knows about it. That is the upside. Downside? Well, there are many, but two most important ones.
- The success rate of VC is about 1000:1, meaning you have to finance 999 to get one right (but it can pay for 999 failures)
- To get into proper VC you must be an accredited investor (definition below); (simply you must have a net-worth of $1M plus, typically much higher than that)
Venture capital (VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth
In the U.S., the term accredited investor is used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by regulatory disclosure filings. Accredited investors include high-net-worth individuals (HNWIs), banks, insurance companies, brokers, and trusts.
So the second one is usually a problem for most investors. They have the intent. The are willing to take the risk, but simply does not have the capital. Interestingly crypto is not regulated and doesn't have a high capital requirement. So benefits are multi-fold:
- Bar is let low for an investor
- Regulatory environment is relaxed
- Even people with high net worth can use crypto, as they can try a much larger number of projects each having a smaller capital requirement that a conventional VC.
That brings be to Splinterlands! I recently dug up a post from las December during the Pretorian Land Sale. At the time I invested $7500 for a Region.
Region is not very liquid currently, but arguably it is currently priced at $500K, and there is speculation that it can easily rise to $1M by the time land is operation. That to be is the allure of VC. 100X + return on your invested capital. In crypto you can do it legitimately with $7500! It is no brainer that I will also invest into upcoming Chaos Legion Cards in 5 days, and trust me, I will invest much more than $7500!
Below is the standard investment concept of a VC. During the Seed Capital the project typically do not make any money. Investors are putting money with nothing but good faith. This is the Alpha Card and Beta Card phase in Splinterlands. Then came Untamed and the Kickstarter Campaign. This was probably the first phase of true VC, where the game was making money. Dice could be the second stage. Land sale was probably a trasition into 2nd to 3rd stage. CL launch is probably the 3rd stage, which will likely tranistion into a broad plateau of new players and new dynamics for the game. Whether we have an IPO or not in future doesn't matter to me, my investment is already highly successful. That, ladies and gentlemen, is the allure of VC.