Although the crypto market has shown some signs of recovery after its "long winter's nap," fundraising in 2023 has taken a brutal hit.
Crypto data analytics provider Messari stated in a recent report that crypto funding for Q3 2023 came in at just under $2.1 billion across nearly 300 projects, down 36% since Q2 and at its lowest level since Q4 2020.
Arguably, some of the most significant innovations in the blockchain world have come from more granular fundraising, allowing small crypto enthusiasts and retail investors to buy into the vision of a project with very few barriers to entry. Yet, we still look to venture capitalists to raise big funds to make Web3 projects a reality.
Yet crowdfunding platforms for Web2 like GoFundMe have continued to raise funds, claiming in its 2023 Year in Help report that it has received over 39 million donations. The platform claims to have raised $15 billion in donations since its launch in 2010.
So why have we yet to bring the same kind of crowdsourcing sensibility, where users can choose to fund the causes they believe in, to Web3?
We spoke with Mo Saravi, CEO & Founder of Embark Finance, a recently launched crowdfunding platform for the Web3 world, about how they are connecting developers and entrepreneurs with the funds they need to bring their projects to life.
What new option is Embark bringing to crowdsourced fundraising?
"Embark Finance revolutionizes crowdsourced fundraising with its groundbreaking Accelerated Fundraising and Investment System (AFIS), consisting of debt-based and equity-based fundraising services, which offer investors the flexibility of direct and DAO-based investments.
Embark goes beyond conventional models by incorporating a hybrid financial approach. It ensures the investment in a centralized way, coupled with decentralized payment methods. This unique blend of centralized security and decentralized transactions sets Embark apart, providing a comprehensive and robust solution for investors and projects. Embark also introduced profit-sharing through the staking of its native token."
What separates Embark from launchpads, incubators, and other fundraising platforms?
"Embark Finance is a comprehensive decentralized crowdfunding platform. Unlike most launchpads, which reward investors with the fundraising project's tokens, introducing potential volatility, Embark guarantees returns in stablecoins with a predetermined value.
While launchpads often specialize in particular sectors or industries, Embark welcomes projects from a range of industries, creating a robust ecosystem that caters to a global audience."
What does it mean for projects looking for funding?
"Embark Finance stands as a game-changer for projects seeking funding, offering a comprehensive platform with diverse fundraising options. Entrepreneurs and businesses can choose between debt-based or equity-based campaigns and tap into a global network of investors.
By choosing stablecoins for their campaigns, projects can ensure better predictability and repayment stability. This approach mitigates the volatility associated with traditional tokens and empowers projects with a greater degree of financial planning and management throughout the fundraising journey."
What does it mean for investors? How does it protect your investment?
"The platform employs a rigorous due diligence process and collateral-based guarantees, mitigating risks and enhancing the safety of investments. Embark Finance efficiently manages administrative aspects by acting as an intermediary, streamlining the investment process for participants.
Embark empowers investors worldwide to participate in innovative projects with relatively small capital, democratizing access to global wealth creation opportunities."
Yield-bearing tokens have come under some suspicion in the bear market — how does Embark maintain transparency?
"Our staking system doesn't contribute to token inflation; instead, it utilizes the platform's profits as yield, distributed in stablecoins. This approach ensures that stakers receive a percentage of the added value generated by the platform, representing real value, as opposed to minted tokens that lack concrete backing. This innovative model contributes to a more transparent and sustainable staking experience.
Blockchain technology and smart contracts ensure transparency with immutable transaction records."
What is the ultimate goal behind Embark?
"Embark Finance's goal is to democratize access to funding and investment opportunities in the Web3 space. We believe in the collective collaboration for the wealth creation process, pioneering its globalization for a more prosperous, innovative, and universally accessible future."
Summary
It's unclear whether crowdsourcing is the definitive solution for blockchain fundraising, but it is one viable solution. The community of crypto retail investors and enthusiasts wants to be involved in the projects they support. Often, launchpad communities are hubs of enthusiasm because the project founders are in the groups hyping the other members. The members, in turn, want to see Web3 projects that will have a positive impact get off the ground – and hopefully make a return on their investments.
Embark Finance has some interesting ideas, including centralized assurances over decentralized investments and staking tokens backed by stablecoins instead of newly minted utility tokens with dubious future value.
Seeing how Embark plays out with its first cohort of supported products will be interesting. If they can successfully be the GoFundMe of the Web3 space, that will create new opportunities to support innovative projects, which would be a win for the space overall.
Embark’s pre-sale begins on multichain DeFi launchpad GemPad this week, on December 15, 2023.