The Benefits Of Becoming A Decentralized Venture Capitalist

Becoming a venture capitalist is one of the fastest ways to get rich and build generational wealth. Unfortunately, although the industry is very lucrative, it has not done much to provide advantages for people outside the rarefied world of elite venture capitalists.

For us to build a fair and just society in the future, the VC industry needs to step outside its comfort zone to take on society's big challenges.

This is where I believe decentralized venture capital (DVC) can play a much more significant role by leveraging the blockchain to provide access to a form of capitalism that is beneficial to the majority, instead of the elite minority.

Decentralized venture capitalism is powered by blockchain technology, enabling fundraising that allows many non-accredited investors to back startups worldwide and it can benefit society in several significant ways.

Diversity and inclusion is a key feature

A major criticism of the venture capital industry is its inherent exclusion of people of color, women and other minorities. Unfortunately, this problem has existed for many years despite many notable VCs claiming that they've made significant strides in making the industry more inclusive for minorities.

A Crunchbase report published last year highlighted that Black and Latinx founders raised $2.3 billion in funding, a minuscule 2.6% of the total $87.3 billion in funding raised by founders.

Decentralized venture capital makes it easy to fund entrepreneurs from diverse backgrounds. By supporting these entrepreneurs, we can create solutions that will increase the quality of life for many people and thus improve society as a whole.

In addition, DVC platforms can help diverse founders and entrepreneurs find early adopters who can become beta testers and evangelists of their products and services.

Fighting poverty is easier when you have access to high performing investments

The Federal Reserve, in a bid to support the U.S economy during the height of the COVID-19 pandemic, increased the total amount of dollars in circulation by $3.38 trillion or roughly 20%. This has led to a rise in the inflation rate in the United States.

Unfortunately, many countries followed the United States' lead by similarly increasing the supply of their respective currencies to help their citizens better manage the brutal economic impact caused by the pandemic.

The unintended consequence that we're now dealing with is the steady and progressive rise of the costs of goods and services.

As prices rise worldwide, people fall deeper into poverty if they cannot invest their cash in high-yield assets that outpace inflation.

For many years, traditional venture capitalists used their in-depth knowledge of economics and finance to rapidly deploy their capital during inflationary times so their cash value would not be eroded.

Small investors typically do not understand the intricacies of macroeconomics and do not have access to investment products that offer returns above the prevailing inflation rate.

Decentralized venture capital can help mitigate the risk of retail investors falling deeper into poverty by providing access to assets that offer high yields similar to what elite VCs currently enjoy.

By offering an avenue where retail investors can find and fund fast-growing startups, DVC platforms can help small investors preserve and build their wealth for the long term regardless of the macroeconomic outlook of their respective countries.

Equal access to the same knowledge and expertise as the rich

The most significant advantage wealthy people have in traditional venture capital is their access to specialized knowledge and information that helps them make intelligent investment decisions.

In contrast, DVC platforms are designed based on the open-source ethos. Therefore, information is freely available to everyone who wishes to participate in a deal because capital allocation tranches are reserved for every tier of investor.

So whether you're a small business owner looking to invest a hundred dollars or an institutional investor contributing hundreds of millions of dollars, you are armed with the same information and thus able to make an informed decision.

These are just a few of the many benefits available to anyone willing to join us as we explore the emerging world of decentralized venture capital. I hope you'll become one of the brave explorers on this expedition.

(Constantin Kogan is a co-founder of GamesPad, a decentralized VC and launchpad for metaverse and gaming offerings)