From Opposition to Cooperation: Why Top Encryption VCs Are Gathering Around the Fundraising Platform Echo?

The crowdfunding platform Echo, which was once viewed as a "threat" by some encryption venture capital (VC), is now welcoming a new wave of capital. Originally serving as a bridge between angel investors and retail investors, it now attracts top VCs including Paradigm to raise funds through Echo. Various signs indicate a shift in VC attitudes towards "community capital," redefining the power distribution in early-stage financing.

The former hostility of VC: Competitive pressure from Echo

At the beginning of this year, Echo publicly criticized certain VCs for their "hostility" towards community fundraising, pointing out that some VCs had prevented founders from offering better terms to the Echo community, and even hoped to completely eliminate the crowd round, only accepting later-stage or overvalued fundraising.

The Block reporter Yogita Khatri said in the latest issue of "The Funding" that these resistances do not come from top funds, but from "copycat" small and medium venture capitalists. Hack VC co-founder Alexander Pack bluntly stated:

For these venture capitalists, platforms like Echo pose a survival threat. Because in the zero-sum game of capital allocation, the community takes a larger share, and the VC takes a smaller share.

( A new paradigm of crowdfunding, detailed explanation of the angel investor platform Echo, can retail investors also act as LPs for VCs? )

From Hostility to Support: Top VCs Fully Enter the Market

However, compared to the early hostility towards Echo, more and more leading VC are choosing to embrace the platform today. Funds such as Paradigm, Coinbase Ventures, Hack VC, and 1kx have recently established dedicated investment groups on Echo, showcasing a significant shift from "quiet support" to "active participation": (Group).

Many VCs will release part of the originally allocated token quota to the Echo community, or encourage founders to open another community round while obtaining VC funding, sharing investment opportunities.

Pack stated: "We encourage projects in the portfolio to use Echo for fundraising, ideally with conditions that are at least on par with ours, or even better for the community. In an ideal situation, we hope that every protocol or network project conducts a community fundraising before issuing tokens."

( How does the market collapse impact VC? Cryptocurrency venture capital is shifting from private equity to liquidity funds, with strategic flexibility becoming key ).

Not a competitor but a tool: Echo strengthens rather than replaces VC

Echo is not a platform that competes for resources with venture capital, but rather a "collaboration tool," as defined by 1kx founder Lasse Clausen:

The founder is still seeking "high-reputation investors who can provide substantial help"; Echo has merely added another channel to capital and community, which is not in conflict.

As observed by Dragonfly partner Rob Hadick, not all projects on Echo have been able to sell out in recent months; only those backed by top-tier VCs can be snapped up instantly. Today's collaborations not only enhance user confidence but also effectively bridge the information gap, becoming one of the key success factors for crowdfunding platforms.

( Blockchain ecosystem competing for developers: Colosseum partners with fundraising platform Echo to accelerate Solana's new applications )

Echo empowered by VC is reshaping the landscape of early investments.

Echo adopts an "invitation system", and projects must be endorsed by group leader (group lead) to be listed. Now that venture capital has its own Echo Group, it also has the power to recommend and assist in sales. Cobie pointed out that these VCs typically do not require carry ( investment profit sharing ), but instead open resources to the community.

CMS Holdings is one of the earliest funds to participate in Echo, and its subsidiary "4 Ventures" has led about 20 investments to date. The company's co-founder Dan Matuszewski stated:

The trading heat of Echo had once cooled down, but recently it has warmed up again, highly correlating with the overall enthusiasm in the altcoin market.

Looking at the future of Echo: Community + Institutions are the new norm.

Despite Echo's original intention to provide retail investors with opportunities to access early projects, Cobie believes that bringing in more reputable VCs will not dilute this vision; rather, it can enhance the quality of transactions and the trustworthiness of the platform. Lex Sokolin, a partner at Generative Ventures, added:

If Echo wants to become a true intermediary and not just a concept or banner, it needs a stable pool of funds and reputation to attract high-quality projects.

With the support of VC, Echo not only did not go off track, but instead got closer to its ultimate goal: "breaking the inequality of information and opportunity," allowing the community to participate in the birth of the next on-chain giant.

This article "From Opposition to Cooperation: Why Top Crypto VCs are flocking to the fundraising platform Echo?" first appeared on Chain News ABMedia.