Venture Capitalists and their role in Ulti Arena
Being at the forefront of the NFT Gaming and GameFi revolution requires capital. At Ulti Arena — we’re building 3 products that need heavy investments:
- NFT Marketplace that could compete with other existing competitors, focusing on the gaming market,
- Proof-of-Gaming: connecting non-blockchain games with crypto world, by enabling gamers to play2earn $ULTI tokens,
- Ultimate Battle Arena: our very own trading card game with unique battle mechanism combining “Magic The Gathering”-like collecting features with innovative battle-board UI.
That’s why at the very beginning, we’ve set our goals to fundraise both with Token PreSale (Retail Investors) and Venture Capital.
There are different kinds of investors:
- Retail Investors: individual entities who participate in the buy/sell of our tokens,
- Business Angels: people that exited / sold their businesses and are actively investing in startups / new projects,
- Venture Capitalists: institutional investors who invest with big returns in mind, building a back-office that’s supposed to support startup founders in their early journey,
- Private Equity: mostly acquisitions and restructuring organized funds — big money!
While both provide money to startup companies, venture capitalists are typically professional investors who invest in a broad portfolio of new companies and provide hands-on guidance and leverage their professional networks to help the new firm. Angel investors, on the other hand, tend to be wealthy individuals who like to invest in new companies more as a hobby or side-project and may not provide the same expert guidance. Angel investors also tend to invest first and are later followed by VCs. By definition, VC’s have a timescale of investments in Years — not months!
Now in the world of crypto we’d also separate 3 kinds of “Venture Capitalists”:
- Traders in VC’s disguise: day-traders who got a sizeable portfolio and can allow themselves to invest in new token projects,
- Equity VC’s turned Token VC’s: traditional VC-investors like A16Z, Accel Partners, Sequoia Capital who all now own at least 1 Token Fund — coming from traditional equity investment they understand perfectly the need to support entrepreneurs in their early stages,
- Native Token VC’s: those that invested in BTC/ETH from the early beginning and now have grown so much in crypto investing that’s separated their own fund.
The reason for suspended Unicrypt Vesting for VC’s and Partners
Now one of the VC funds that invested in our project is exactly one of the traders in VC’s disguise: they hardly support us in any other way than providing initial capital, and the only reason for them to get early is to literally sell out and profit as early as possible thus having retail investors to bear the costs of it. This particular VC had 384,062,961 of vested $ULTI tokens and sold 291,549,913 right after we launched. This meant two things for us:
- We have barely even launched the token for 2 months, and they’re already selling out majority of their vested tokens, thus we have every reason to believe that their intention was to get out early,
- They could easily wipe out our project at this very early phase by siphoning out the liquidity pool.
Let’s get to the first point. We understand the logic of our agreement and we trusted the VC to not harm the project. We also do understand that it’s their tokens that they have purchased in their own rights — but it shouldn’t bring us to a point of life and death of the project and dissolving our token value simply because of the “take profit fast” approach. We never wanted to have anyone investing with the “flipping” mindset — we trusted the investor to make the right decision and not damage our products and reputation. We also believed they could support us in the long-term.
Which leads us to the second point. We had to protect the project — thus we decided to suspend all vesting from UniCrypt — of VC’s and Partners. This drastic measure was to prevent further pressure on the price that we’ve already seen. While we repeatedly asked this one VC to liquidate their positions in a time when it doesn’t affect the project nor the price (e.g. after product launches and with increased marketing) — they refused to listen and continued. With all other partners and VC’s we had no such problem and always came to a consensus with them. Instead of spending their time helping us in this crucial early stage, they continued to sabotage it.
For more information on how venture capitals work, you can review the article here: https://hbr.org/1998/11/how-venture-capital-works
What we learned is that trust is not everything — every agreement should have its boundaries and we were too lenient. The entire UniCrypt locking schedule for Partners and VC’s are listed here: https://bit.ly/vc_partners_vesting
Now that the entire UniCrypt pool is forever locked, that means that in total 6,911,620,682.72 of ULTI’s will be locked forever — essentially “burned”.
All the VC’s and Partners who have had Unicrypt Locks are in agreement that we can prolong the vesting period — they simply believe in us and want to stay with us in the long-term — this we appreciate and continue to set a timeline which benefits both sides. Every partner / VC except for one.
And given the fact that the VC could harm the project in an irreversible way, we have decided to part ways. But it seems like the VC doesn’t want to stop there. We have numerous evidence of bullying and threatening of our staff and we won’t let this matter escalate further.
If necessary, we will connect with authorities to explain the situation with this rogue VC that not only had the intention to destroy our project but also has plans to continuously harass our team and community members.
We stand in strong belief that we did the right thing to protect our retail investors’ investments and our reputation. Intimidation tactics from that particular VC just shows how unprofessional and hostile they are — we hope this brings light to other startups or projects to carefully choose their institutional backers. We also encourage everyone in the community to speak up and forward any evidence of bullying and threatening from that particular VC — which again will be unveiled if they continue to do so.
At the moment, we’re developing our own locking tool for VC’s and Partners — and are discussing prolonging the vesting schedule with them.