TLDR:
- Crypto startups are adopting rolling fundraising rounds to continuously raise capital.
- This approach allows companies to quickly inflate valuations using fresh investor money.
According to a report from Bloomberg, crypto startups are embracing a new fundraising trend known as “rolling” funding rounds. This unique method allows companies to continuously raise capital and quickly inflate valuations by leveraging a conveyor belt of fresh investor money. The adoption of rolling rounds reflects the industry’s recovery from the 2018 bear market and the desire of VC funds to deploy their cash reserves rapidly.
Early investors benefit greatly from this approach as valuations increase with each new commitment from late-stage backers. However, some critics argue that these “fluid valuations” lack a solid foundation, while others believe that traditional venture capital models are not well-suited for the fast-paced nature of digital asset firms.
Matt Luongo, from the venture studio Thesis, highlighted that capital formation in the crypto industry is constantly evolving, with concepts like governance and liquidity differing from traditional startup practices. The shift towards rolling fundraising rounds reflects the dynamic nature of the crypto market and the need for innovative approaches to fundraising in this space.
