The creative destruction of Cofound.it
The core idea of Cofound.it was to create an alternative VC ecosystem built around crowdfunding, democratisation and transparency. Instead, the larger ecosystem developed and transformed into something completely opposite.
Instead of waiting for the market to turn around, we have decided to opt for creative destruction, wind Cofound.it down and distribute the assets to the token holders.
How it started and the ICO period
Two years ago we started what would become Cofound.it with a strong belief that the global economy, enabled by an open digital economy, should be open to all entrepreneurs, no matter who they are or where they are from.
Cofound.it was a great idea, built around good insight into how the market would evolve and it was very well timed. During these two years, the blockchain ecosystem and the Ethereum community, in particular, turned into the largest decentralized VC that has ever existed.
The launch of Cofound.it was fantastic — it was the first crowdfunded project that was completely funded by the crowd in a pre-sale. Pre-sale participation was only granted to community members that interacted individually with one of the founders.
“Priority pass” was an innovation to whitelist token holders as special members of the community. With added KYC to the Priority Pass community the platform was practically alive from day one.
Cofound.it is one of the rare projects that had a positive result in the first month of existence.
More than 350 projects were evaluated for participation on the platform in 2017, 11 projects on-boarded.
CFI token is one of the rare tokens that have actual utility — from day one it is used on the platform to access to Priority Pass status and as reward for performing crowd evaluations.
CFI token was listed on premium exchanges — Bittrex and Bitfinex with market price reaching $0.43 and high liquidity between $0.5 M and $1 M before the decline of the market.
In November 2017 it became clear that the ICO concept needed to be reinvented, the power shifted to early professional investors and hype factories promoting ICOs to retail investors. We started the SEED programme to give the crowd the opportunity to join at the earliest funding stage. It became clear that the “community” at the core of the crowdfunding concept disappeared.
In February it was evident that we were correct in our predictions (good summary from June by Ari Paul). The community-driven ICO concept of crowdfunding was dead.
Post ICO period until today
The core of the Cofound.it business idea was how an alternative VC ecosystem could be built around crowdfunding, democratization, transparency and high quality. Instead, the larger ecosystem developed and transformed into something completely opposite. But what should one do when things are not going in the right direction — the community is exploited, and we ourselves do not have the power to turn the market around?
To continue helping projects with ICOs was not the right thing to do. You don’t push your partners into what you believe will attract neither the right capital nor the right community of users. At Cofound.it we restructured and the team was heavily reduced. The advisory team started to act as the first advisors of the platform while the remaining team focused on making the platform relevant for the next wave with two primary focuses:
Helping existing ICOs with post-ICO services like startup advice, treasury, legal advice, community management, communication in general … services we developed for ourselves and knew there was a demand for.
Upgrade the platform/protocol to eventually become a trustless matchmaker between different stakeholders including innovators, business experts, legal experts, small and big investors and VCs.
This was the logical thing to do… but was it what we really meant when we started Cofound.it? How long would it take for the market and community to come around?
Continue on or close down?
ICOs are about realizing great visions and enable the creation of platforms that can potentially become huge and generate high returns. It’s also about matching expectations for an entirely new technology stack that will someday drive a new internet with users and entrepreneurs looking to build and use products today.
The state of technology today does not match the hopes raised by thousands of ICO projects. The blockchain space has been full of over-promises, and it’s largely the community that has had to take the blows so far.
But what happens when the market realizes what has been going on? The core market disappears, there is no liquidity and there are hundreds of interesting existing projects with prototypes waiting for the core layers and infrastructure to develop and mature. From this perspective, the recovery of the market will take time.
In light of everything discussed above what should we as founders and members of the community do? We have two options:
Carry on — evolve our purpose, wait, spend our funds wisely and prepare ourselves for a shift in the market at some point in the future.
Opt for creative destruction — close down operations, distribute assets back to the community, spend our time and energy on other things that will help the ecosystem evolve and potentially come back in the future when the timing is right.
Closing Cofound.it down
After a lot of consideration, weighing the different options against each other and looking at it from different perspectives, we have decided that the second option is the most responsible way to go — we wind Cofound.it down and distribute the assets to token holders. The purpose of Cofound.it was to build a platform and protocol to enable an alternative VC ecosystem; to continue with this purpose for a market that does not exist is not responsible.
From the beginning Cofound.it was created to set better crowdfunding practices, we did so at the beginning and are hopefully doing so at the end.
By choosing creative destruction we keep the pace of innovation high in the space and hopefully set an example for other projects that will choose a similar course of action instead of quietly spending funds raised from the community for other purposes than was originally intended.
The last two years cannot compare to anything else I’ve done. I’ve had a fantastic time building and working with the team we built in Ljubljana, London and Stockholm, I’ve worked with inspiring entrepreneurs all over the world and met so many great people in the community. My work in this space is not done, I’m still committed to doing as much as I can do for a future enabled by trustless and democratic technologies.
Former CEO and co-founder of Cofound.it