Capital Incubater unveils structured loan product for burgeoning businesses
In the rapidly evolving world of Web3, a new player has emerged on the scene: Incubater Capital. Based in Brisbane, Australia, this innovative company, co-founded by Nathan Chen and Will Nicholson, aims to revolutionize the way startups raise capital.
Incubater Capital's flagship offering is the Community Liquidity Offering (CLO), a groundbreaking model that enables startups to raise funds from their community or a broad base of supporters without giving up equity or control. This approach contrasts sharply with traditional venture capital, which typically involves exchanging equity for capital, often resulting in dilution of ownership and control.
The CLO model works by pooling capital from community members or investors who support the startup’s vision, typically in exchange for future liquidity rights or other financial arrangements that are not structured as equity ownership. This allows startups to raise funds while retaining full control and ownership of their company, avoiding the dilution that comes with traditional equity financing rounds.
Traditional venture capital funds invest by purchasing equity shares in a startup, which results in founders giving up a percentage of ownership and sometimes board control or decision-making influence. These VC funds then expect returns through liquidity events like acquisitions or IPOs, distributing proceeds based on ownership stakes and governed by fund structures prioritizing investor returns with carried interest splits.
In contrast, the CLO model aligns more with innovative capital-raising approaches like revenue-based financing or community-driven offerings. This approach can be particularly beneficial for startups looking to engage their user community or early adopters in supporting their growth financially without complex equity arrangements.
Incubater Capital's goal is to provide founders with a path to validation that traders trust. By going through the CLO process, startups can increase their visibility and credibility within the web3 ecosystem. This increased exposure, in turn, makes it easier for startups to attract traditional venture capital investments after they have successfully raised funds through the CLO.
The Web3 space is seen as the next frontier for innovation by Incubater Capital. Major firms, including Sequoia Capital, Y Combinator, and BlackRock, have also recognised this potential and have entered the Web3 space. Incubater Capital positions itself as a next-generation alternative to traditional venture capital, aiming to become the Y Combinator for the growing Web3 community.
Nathan Chen, one of the co-founders, can be contacted at [email protected]. Chen and Nicholson bring a wealth of experience to the table, with Chen having a background in consulting and Nicholson in trading.
In summary, Incubater Capital's CLO allows startups to raise capital from their community without giving up equity or control, differing fundamentally from traditional venture capital which requires equity stakes and often some governance rights in exchange for funding. This innovative approach could save the startup industry from its current problems and pave the way for a new era in Web3 funding.
[1] Traditional Venture Capital Funding: https://www.investopedia.com/terms/v/venture_capital.asp [2] Carried Interest Splits: https://www.investopedia.com/terms/c/carriedinterest.asp [3] Innovative Capital-Raising Approaches: https://www.forbes.com/sites/forbesfinancecouncil/2021/04/26/5-innovative-capital-raising-approaches-to-help-your-business-grow/?sh=7645722266f4
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