If you have a product with PMF or even revenue, Virtuals is an excellent fundraising method.
Author: starzq.eth
There is already a lot of content introducing the Virtuals gameplay from the perspective of retail investors, but there is very little from the perspective of project teams/Dev. Essentially, Virtuals is still about asset issuance, so onboarding quality developers is key to maintaining competitiveness.
Thanks to the invitation from Virtuals' Chinese region head @felixincrypto, I will be helping to discover and support quality projects as a Virtuals Partner. This article aims to provide a clearer introduction to what Virtuals means for project teams and share a playbook, so that more project teams can understand the advantages and differentiators of Virtuals. I also welcome comments and discussions.
If you think you are suitable for this model, feel free to DM me. I am happy to act as a Virtuals Partner to advise and support quality developers and projects, deliver interesting products, and help this ecosystem develop healthily.
I believe this is currently the most suitable fundraising and launch method for small and micro product teams (and it is still in a period of dividends for project teams).
AI has reduced the labor costs for startups but has not lowered fundraising costs
AI has changed the way startups operate by significantly lowering the costs of coding and content creation, allowing many small teams, or even individuals, to create companies worth hundreds of millions of dollars with annual recurring revenue (ARR) in the millions. For example, Arcads AI has developed an AI video ad generation tool, and a team of six has already created $5 million in ARR; another example is the super individual @levelsio, who has created seven products with a combined ARR of $3.3 million.
However, AI has not changed the way startups raise funds; founders still need to spend a lot of time finding VCs to pitch. Based on my own experience and that of industry friends, "fundraising" has essentially become a full-time job. Pitching can take several months, and following up until the fundraising is completed (due diligence, legal review, signing agreements, and transferring funds) can take several more months, after which they start preparing for the next round of fundraising. Additionally, as the number of shareholders increases, some effort must also be spent managing investor relations.
In the AI era, if someone understands a bit of technology and identifies a user pain point in a niche market, they can launch a product and gain users and revenue. The team might only have two full-time employees, one responsible for product technology and the other for marketing. If one person is fully dedicated to "fundraising," 50% of their effort cannot be invested in product development, which is very inefficient.
Moreover, not everyone is good at "fundraising," and current VCs are also very cautious and do not invest easily.
Some small teams choose not to raise funds and use their own capital to develop products, adopting a bootstrap model. Of course, some people are lucky enough to achieve PMF with their first or second product, even generating cash flow. But it must be acknowledged that this is a very low-probability event; statistics show that 90% of such companies fail within three years.
I believe a very important reason for this is that founders bear all the financial burden themselves, and for a period (six months to a year) without any cash flow, the psychological pressure is significant. This psychological pressure can also affect product iteration and success.
Is there a better way?
The Virtuals Genesis Launch aims to create a better way for project teams to raise between $2 million and $20 million in seed funding based on a product or even an idea, while also achieving a win-win with the community: projects lock up funds for 1-6 months to reach product milestones, and users patiently hold to benefit from the project's long-term development.
Introduction to Virtuals Genesis Launch
Raising funds from the community, wasn't that the "creator economy" in the last cycle? For example, in 2021, "Ethereum: The Infinite Garden" raised 1,035.96 ETH, peaking at nearly $5 million, and this fundraising also boosted Mirror.
However, the problem with this type of fundraising is that while the funds seem transparent, it is unclear whether the project team is using them for real development or for yachts and models, and retail investors cannot decide. In the last cycle, there were fundraisers for buying land and basketball teams, but there was almost no follow-up, which led to this model gradually fading.
Virtuals has designed a system to solve the above fundraising issues and also helps with GTM:
The team issues 1 billion tokens through Genesis Launch, raising 42k $Virtual at a valuation of 224k (112k $Virtual), meaning 37.5% of the tokens go to users, 12.5% goes into a liquidity pool, and 50% goes to the team;
The 42k $Virtual raised from users does not go directly to the project team but enters a liquidity pool to prevent the team from immediately taking the money and running;
Currently, successfully launched projects generally open at over $4 million, with the record being Solace opening at $50 million and stabilizing at $36 million. This means that after opening, the project team has successfully raised $2 million to $20 million in seed funding;
How to prevent the team from selling tokens or engaging in insider trading at launch? By collaborating with @tokentable, the team's tokens will have clear distribution and lock-up periods. If the lock-up time is too short, vesting is too fast, or distribution is unclear, the community will raise questions;
How to reduce the likelihood of users immediately selling off at launch, causing a price crash? This involves a core mechanism in Genesis Launch: Points.
Users participating in a project's fundraising need to accumulate points, and the number of points spent determines how much virtual they can invest. If users sell off at launch, they will be "cooled down" and cannot earn new points for 10 days, risking missing out on more exciting projects. Generally, at the beginning, since users have few points, even if they hit a 100x project, the absolute profit might only be around $1,000, making the likelihood of selling off low; additionally, staking can also earn points, further reducing the likelihood of selling;
Since participants in Genesis Launch are all very early projects, as the projects develop, they will give the tokens greater value. For example, @basisos opened at $1 million and peaked at $38 million; if they sell off at launch, they will miss out on the subsequent 38x increase;
Early users have been participating in the Virtuals ecosystem since last year and have generally made money, so they are also willing to participate in this PVE game to help the entire system take off;
Additionally, Virtuals has a mechanism that prevents any address from purchasing more than 0.5% of the tokens, reducing the risk of concentrated holdings and large holder sell-offs.
Thus, the entire system constitutes a three-way game between the platform, project teams, and users: for the Virtuals platform, as long as it continuously onboards quality new projects and helps these projects grow, users can keep earning points, spending points, and using Virtuals, creating a positive feedback loop.
At this point, project teams will certainly be concerned about how to manage daily expenses if they need to lock up funds for at least a month. Virtuals has an interesting mechanism that allocates 0.7% of daily trading volume (corresponding to 70% of the 1% trading fee) to project teams. Currently launched projects have daily trading volumes ranging from $20k to $2M, meaning 0.7% translates to $140 to $10,500, which amounts to $4,200 to $305,000 per month. The lower range is sufficient to support a small team of 2-3 people, while the upper range is quite substantial. This is also a part that traditional VC fundraising cannot provide;
Another aspect that traditional VC fundraising cannot offer is that projects entering Genesis Launch will have "angel investors" in the community conducting in-depth research and actively sharing on Twitter and in the community, providing built-in marketing and GTM. For example, before Solace launched, I saw no less than 10 tweets about it. One reason is that Yap earns Virtuals points, but more importantly, points are very valuable, and everyone wants to know which projects have the most potential. If the project is excellent, there will be a lot of organic promotion; I have personally shared quite a few, resulting in hundreds of thousands of exposures. If there are unreasonable designs or any unsavory history, the community will also conduct due diligence.
For quality projects, Virtuals also provides additional support.
When the project successfully launches, the official team will spend an additional 42K Virtuals to purchase tokens. On one hand, this increases the cost of sniping (after the official purchase, the FDV generally exceeds 10M), and on the other hand, these tokens will be airdropped to Virtuals' staked users, enhancing user participation;
Virtuals provides official marketing support, including tweets from the official Twitter account, research tweets from @Virgen_Alpha, and Online Pitch Space. In the Space, teams can present themselves more comprehensively, which greatly promotes the project. Already launched projects will also be invited to the Space to update their progress. An interesting example is that during this week's Space, Holly's progress update was seen as Alpha by community members, directly driving a 70% increase online.
Virtuals has its own ecosystem fund, Virtuals Venture, which invests in outstanding projects and can also help connect with OTC, addressing the funding issues mentioned above.
Virtuals also has a Virtuals Partner Network (VPN, which I am part of), consisting of investors, domain experts, scholars, and researchers to provide comprehensive support to project teams;
Opportunities to enter the ACP protocol, becoming
Various resource connections.
In summary, project teams only need to focus on product technology in the early stages, while Virtuals handles the rest of the fundraising and marketing.
It can be seen that Virtuals Genesis Launch is particularly suitable for small technical teams with startup products that do not have the extra energy to seek VC funding or are not skilled at it. Communicating directly with the community through the product is the simplest way. Moreover, VCs are currently also hesitant to invest.
Of course, if you are a star entrepreneur who can easily secure funding, you will have more options.
Virtuals Genesis Launch is more about growing from the community, while traditional VC funding is more about high-profile investments.
Examples of community research and marketing
Every day, there are ecological daily reports in both the Chinese and English communities, covering various ecological projects.
https://x.com/ZaggyGoKrazy/status/1930294077469405671
https://x.com/gkisokay/status/1930557747201974699
Project research and project ratings
https://x.com/starzqeth/status/1922460334289518725
https://x.com/bigwil2k3/status/1930785772103418053
https://x.com/kaylyn_0x/status/1930141738049687856
Inviting projects to the Space (the Chinese community is self-organized, while the English community's Vader Space requires airdropping 1% of tokens to $Vader holders)
https://x.com/ZaggyGoKrazy/status/1927696366148759798
Comparison of Virtuals Genesis Launch: Pump.fun / DAOS.fun / Believe
Project team friends may also ask, "I can also raise funds on platforms like Pump.fun, DAOS.fun, or Believe, and the launch costs are even lower."
I think the biggest trade-off is that it is difficult to achieve both "low launch costs" and "long-term user support." Therefore, it can be seen that users on these platforms tend to sell off very quickly, which is not conducive to the stable development of the project. At the same time, since project teams do not have a lock-up mechanism, they can sell off at any time, resulting in a prisoner’s dilemma where project teams and users do not trust each other.
Moreover, Pump.fun has consistently performed poorly in anti-sniping (some friends say this is actually a feature), which may prevent project teams from even purchasing their own tokens. There are also no restrictions on single holdings, making it easy to engage in insider trading; DAOS.fun's whitelist mechanism has mixed reviews and is not suitable for fair user participation.
Among these platforms, I believe Believe may be the biggest competitor to Virtuals: it has a low launch threshold and will share 1% of the transaction fees with project teams as income, fitting into the narrative of "Internet capital markets," aiming to create a fundraising platform. However, due to the low launch threshold and the lack of lock-up for project teams, most of the projects launched are still memes, making it difficult to find "projects with long-term user support."
After comparing these platforms, I can't help but admire that Virtuals Genesis Launch is truly designed with care, aligning knowledge and action.
Additionally, Virtuals is a team that has risen again after experiencing two price drops of over 90%, demonstrating strong resilience and iterating daily. Building alongside such a team is highly efficient.
Playbook: What types of projects are suitable for launching on Virtuals Genesis Launch, and how to operate?
I personally believe that within the current Virtuals Genesis Launch mechanism, the most suitable projects for launch are small product technology teams of five or fewer people, who can sustain their team solely through transaction fees and pursue a higher ceiling through product PMF and token design. Typical projects include @niyoko_agent, @solacelaunch, and @BasisOS.
Of course, there are also VC-funded projects testing the waters by issuing a sub-token, such as @SamIsMoving and @Bizzy_agent, which will need to manage the relationship with the parent token in the future.
The core point of operating a project in Virtuals Genesis Launch is "trust":
Product trust: clear product definition, roadmap, and products that have achieved PMF;
Tokenomics trust: lock-up, clear distribution, and vesting;
Community trust: clear communication;
Team trust: a doxxed team;
Official endorsement: ranking in the Virtuals hackathon, receiving support from Virtuals Venture, official retweets, and official purchases of project tokens for airdrops, etc.
I believe a qualified project must meet at least the first three criteria. To achieve better results, it should meet four or all five criteria.
Taking @niyoko_agent, @solacelaunch, and @BasisOS as examples:
It can be seen that:
Niyoko meets almost all five criteria, and after just unlocking, the FDV remains relatively stable. According to official data, the staking rate has even increased slightly from 20% to 22%;
Solace also meets all five criteria and, as the first place in the Virtuals hackathon, has received the most official support. However, their challenge is to launch a product that achieves PMF before the team unlocks. By the way, Solace initially may have lacked experience with a short lock-up period, but they quickly listened to community feedback and changed it to four months;
BasisOS, although the team is anonymous, stands out among projects launched on Virtuals due to its high product usability and attractive returns. The FDV has risen from an opening of 1M to a peak of 35M, currently sitting at 25M, making it the project with the highest increase after launch;
The daily transaction fee income from these projects is more than sufficient for the team's daily operations, and it can be said that Solace and BasisOS have very substantial income.
This also echoes my earlier point: in Virtuals, the availability of products and the various trusts built upon this are the most important. Making grand promises may work for pitching to VCs, but it does not hold up here.
Additionally, the operation of the project does not necessarily need to be on Base. For example, BasisOS saves money on Arbitrum, while the project's neutral arbitrage operates on Hyperliquid. The current role of the $BIOS token is to provide liquidity and mindshare incentives, as long as the overall logic is sound.
Welcome to Join
In the past month, the data from Virtuals has been impressive, with dozens of projects successfully raising seed rounds of $2 million to $20 million just by letting their products speak for themselves. At the same time, the number of users participating in the Virtuals ecosystem is increasing, creating a positive feedback loop.
Moreover, I believe this model is not only applicable to crypto startup teams but also to small teams in Web2. If you have a product with PMF or even revenue, Virtuals is an excellent fundraising method that can accelerate product development.
(If you agree while reading this article, feel free to share it with your Web2 friends, haha.)
We are currently in a rewarding period for Virtuals, where projects with solid fundamentals are likely to receive official support, and users are actively seeking excellent projects to invest in. Joining now can yield significant results with less effort.
Finally, I welcome outstanding developers and project teams to join. As I mentioned at the beginning, I am very willing to act as a Virtuals Partner to advise and support quality developers and projects (though I won't take on too many due to limited energy). My assistance to project teams includes but is not limited to product, content, marketing, and tokenomics.
I have personally managed AI products with over 100 million DAU and have raised tens of millions of dollars for startups. The pain points mentioned above resonate with me. If I were to do it again, I would use Virtuals for fundraising instead of spending six months meeting with individual investors, presenting PPTs, and discussing data. It really shouldn't be an inefficient method that still exists in the AI era.
If you already have a project in progress or are preparing to start one, feel free to
fill out this form to improve communication efficiency; if you currently do not have plans for a project but are interested in this method, you are also welcome to leave a comment below the article or dm me to discuss.
I joked with a friend this week that I hope to discover a billion-dollar project with two or fewer people. Could it be you sitting in front of the screen?
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