Capital Flows
How should capital be put to best use?
Gain leverage by raising cheap capital when you don't need it.
Capital Formation
The purpose of capital is to support ideas that produce value.
Who Invests?
Everyone involved with a business is an investor:
| Investor | What They Invest | What They Get |
|---|---|---|
| Founders | Time, energy, reputation | Equity, control |
| Employees | Skills, commitment | Salary, options |
| Customers | Money, attention | Value, status |
| Capital | Liquidity, belief | Returns, influence |
Venture Capital
How does VC work?
Is VC Right for You?
| Factor | VC Fit | Bootstrap Fit |
|---|---|---|
| Growth | Exponential required | Organic okay |
| Market | Winner-take-all | Niche viable |
| Exit | IPO/acquisition needed | Lifestyle possible |
| Control | Shared with board | Retained |
| Timeline | 5-10 year pressure | Your pace |
The VC Token Problem
The dark side: Launch at maximum (unrealistic) valuation, use asymmetric information to dump on retail.
Crypto Capital
Alternative funding mechanisms:
| Source | Mechanism | Example |
|---|---|---|
| Public Goods Grants | Protocol treasuries | Optimism, Arbitrum |
| Investment DAOs | Collective capital | MetaCartel, Alliance |
| Token Sales | Community funding | Fair launches |
| DePIN Rewards | User contributions | Helium, Glow |
See Participatory Capital for the new model.
Context
- Capital — The overview
- Participatory Capital — Users as owners
- VC Playbook — Traditional approach
- Investment Thesis — Strategy
- Investing — Putting it to work