Spotlight Series: VTVL
Because nobody keeps track of token-vesting schedules.
Hello,
One of the most rewarding aspects of working in venture capital (and writing newsletters) - is you meet really cool people doing some incredible things. I have been writing their stories in-depth over the past few years. Last bear market, I wrote about Nansen and Axie Infinity. Then I stopped writing for a bit. Having both ventures you did a long-form on through the last bear cycle become a unicorn eventually is a nice brag.
But I want to systemise things a bit through this bear cycle. I have been thinking of writing about interesting ventures I meet or have been involved with in the newsletter for a bit. There reasoning behind it can be summarised in four things
There is an audience and an appetite to consume information on new ventures.
It is the most effective way to help a startup find initial velocity and experiment with finding PMF.
Potential hires that are looking for a new venture to join can directly apply
Dealflow. I will almost be exclusively covering pre-seed/seed-stage ventures from founders I have known for a while.
Starting today, I will be writing a short form on an interesting startup from the Decentralised.co Community every Tuesday and Thursday. It should help members have a pulse on what’s being built and where we are headed. It also helps founders look for feedback and access to a broader network. These won’t be going out as e-mails. Now that we have the boring, setting the context stuff out of the way, let’s dig in.
Part of the challenge with running a token-based project is executing token vesting in a timely fashion. There are multiple stakeholders - each with different vesting schedules. Investors, team members, DAO tokens and oftentimes contractors that were promised tokens. Every stakeholder with potential tokens to be vesting is looking for constant assurance that they will receive the tokens promised to them. It is a giant, messy problem involving spreadsheets, a lot of manual transaction signing and massive information asymmetry.
There is a major power imbalance too. Investors can negotiate for sweeter vesting terms and sell before employee assets are vested. Essentially, leaving little to no upside for those buildings. On the other hand, founders can renegotiate when and how tokens will be vested. Quite recently, a DAO decided it is cool to claw back a large chunk of investor tokens a year after the investment was made.
Smart contracts that stream tokens based on pre-set parameters are an elegant workaround for this. If you know the wallet address and time at which tokens need to be released to it - you could stream the vesting assets without human intervention. Basically, codify the process through which incentives are distributed. This is what VTVL is building.
VTVL makes it easier for founders to manage variable vesting schedules for different stake holders. The distribution of the assets does not require manual intervention or managing spreadsheets with wallet addresses. Instead you enter details about when and how many tokens get released to whom - and VTVL takes care of the rest for founders. More time building, less time in spreadsheets.
No-Code Tool for Buildooors
Vivian Law - one of the founders at VTVL, had spent seven years working at a VC fund handling over $1 billion in AUM. The fund she used to work at backed Bitmex back in 2016, long before Arthur Hayes began writing his beautiful long forms. This is necessary context. I asked her what her motive for building VTVL was and she said - “to solve the power imbalance between founders and VCs”. She is an insider that is now building tools to power the rebellion. How does a no-code tool help with it? Well here’s how.
VTVL makes it easier for founders to launch their tokens in a few clicks. The platform allows anybody to launch a token without necessarily dealing with the messy bits of code that act as a hindrance. There were a number of platforms that allowed a variation of this in 2017 too - but the focus is not on fundraising here. It is on stakeholder management. VTVL lets you define who receives how many tokens over what period of time without writing code.
There is a different angle to this. Communities will have better insights on when and where tokens are vested and released. We keep saying “bullish unlocks” - but truth of the matter is there is information assymetry in how unlock related information is passed to the community. Members deserve to know when a large chunk of a network will be unlocked for different stakeholders. VTVL aims to streamline that process over time to make it easier for founders to earn the trust of their communities.
In my mind, they are solving a data availability problem. All of the information the platform shows can be queried on-chain. But the information is rarely ever shared in an easy-to-consume format. If you are a founder, you ideally want information on which address is expected to receive how many tokens at what point. For investors and employees, tracking vesting information of a portfolio of tokens becomes hard to track. That is the problem VTVL is solving for.
Stage and Go-To-Market
One way to get a lot of founders on board is through working with accelerators. They usually have multiple cohorts of founders launching tokens. The other is to go through ecosystem development funds. VTVL has integrated support for Ethereum, Binance and Polygon. So it is likely that we see a number of projects building on the three using VTVL for distributing their assets.
The platform is currently in its beta and live on mainnet. Select companies are being onboarded at this point in time. I had access to a demo that shed some light on how the product will work. If you are interested in trying it - consider signing up for the waitlist for investors and founders on the product’s landing page. Early adopters get to use the platform for free - for a lifetime. I think that is a decent perk.
In the long run - I would not be surprised to see increasing financialisation on the platform. For instance, a person with vesting assets on the platform could share a “profile” with desks that may be interested in lending against vesting instruments. It is also a possibility that the platform is at some point able to enable OTC trades of assets that are vesting towards early-stage employees at networks. The challenge with both models is the requirement of licenses. It almost flirts with securities laws.
The platform does have a few competitors in the market. Llamapay and Liquifi are the most known alternatives. What would differentiate teams chasing this problem, in particular, will be how they distribute the platform. Once a product becomes the standard - everyone hops on board. Think DocuSign, Carta or Crunchbase. These are platforms with network effects and very sticky customer behaviour. Because - think about it. Would a founder keep switching the service they use to manage vesting every 2 months for no reason? They set it up and forget.
How to get involved
The waitlist for the website can be accessed here. You can alternatively just reach out to the head of growth for VTVL at kevin@vtvl.io. They just cleared audits from Quantstamp and Certik. The platform should open up for general access in the weeks to come.
You can reach out to the founders on @voylaw and @nishafoo on Telegram if you are interested in speaking to them.
Also come join us at Telegram. It is where we have been having the vast majority of our discussions. See you soon with a long-form on bridges,
Joel
Disclosure: I had given a grant from this publication to the founders of VTVL at their pre-seed stages and joined on as an investor with a very small angel cheque later on. My early bet was entirely on the founders and the belief that venture capital will be decentralised over time.
Tell us about yourself
If you are a founder building cool things at the pre-seed stages, we want to get know more about you. We are structuring grants, investments and well, this spotlight series. Quite a few things have been cooking in the background.
Fill in information about what you are building in this really short form - here.