- In the current fundraising model, traditional venture capitalists get far better deals than other investors.
- Kain Warwick, founder of Infinex, proposes a new Patronage Model, aiming for equitable opportunities for all investors using NFTs.
- Infinex raised $65.3M with Patron NFTs from venture capitals (VCs) and community members.
- Despite rising crypto prices, funding remains significantly lower than in previous years.
Be a well-known VC.
Be in the know across the crypto space. Leverage your connections to get in on the ground level with any crypto startup you want, and amass thousands of tokens in the process.
Watch some startups fail but make it big with others.
Profit.
If that’s the crypto VC model right now – and Kain Warwick of Infinex thinks it is – then it’s broken.
He’s got a new idea to fix it: the ‘Patronage’ model. Let’s see what he means.
Out with the Old VC Model
VC investing isn’t quite as simple as it sounds, of course. There are various regulations and a high risk of failure – even well-funded projects can and do fail.
However, it is true that well-heeled venture capitalists often have opportunities that average investors do not. Case in point: out of $2.2B raised as of the end of August 2024, six venture capital firms raised a full quarter of that total – $500M.
It’s part of the old ‘the rich get richer’ story, and the whole idea runs counter to what crypto is all about, with its emphasis on decentralization and encouraging new participants.
VC funding itself has also fallen behind in 2024. After a flurry of activity in April, which raised hopes that investment would return to late 2021 and early 2022 levels, funding largely slowed down.
Current investment is nowhere near those highs in terms of value, although the number of fundraising rounds surged in the early part of 2024.
And with a lot of competition for a smaller pie, it can be helpful to stand out from the crowd.
In with NFT Patronage
Kain Warwick, the founder of Infinex, suggests a new ‘Patronage’ model aimed at creating equal investment opportunities through Patron NFTs.
These NFTs allow investors to support projects on the same terms, moving away from the traditional venture capital model.
Infinex just held four rounds of a Patron Sale, raising an impressive $65.29M.
Investors included retail participants as well as big crypto names like Wintermute Ventures, Wormhole, and Solana Ventures.
Will the Patronage model catch on?
Using NFTs to incentivize investment isn’t new. But unlike an early-access model, the Infinex Patron NFTs don’t offer any on-chain benefits.
Instead, they rely on the value of the NFTs themselves to drive interest. That, and the ability to directly invest in a growing crypto protocol.
The only difference between the three tiers of NFTs is the release schedule, with the highest-value NFTs available for trade or sale immediately.
Thus, the market for the Patron Sale was primarily early adopters and investors, people already using Infinex.
Conclusion – Patronage Is Promising but Unproven
The new model worked for Infinex, so it might work for others.
But will it spread, and will it have the same impact on other companies? As interest rates fall and the market heats up, we might find out.
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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