I remember the day distinctly, Thursday, October 21st, 2021. I'd just finished a long workday and was ready to unwind. We'd just spent a few months building our MVP and were exhausted. In addition to that, we'd been actively fundraising. A hot bath would be a nice way to counter the numbness of my mind after 3 weeks of countless back-to-back VC meetings during a relentless bull market which seemed like it would never end. It seemed as though every Tom, Dick, and Jane made their way into the capital allocation business. You had folks that went into traditional hedge funds, some went to work for Silicon Valley VCs and some just opened their own family offices/micro funds. You could do no wrong in this market, or so we thought.
As I lay in the bathtub, staring at the ceiling, something dawned on me. It's 6 pm on Thursday, October 21st, the day before Friday, October 22nd, which is the day we'd let all interested parties know that we're closing our seed round. I didn't understand how or why I was in that bathtub when we had less than 24 hours to close the round. No paperwork had been sent out, no clear instructions had been provided to any parties, and we needed to get things straightened out and fast. I quickly wrapped up and went over to my co-founder's place which was only 5 feet away from my room. Yep, we're brothers. I explained to him that we need to be firm with our deadlines and close tomorrow. Close our seed round with all SAFE(s) executed and funds wired. Initially hesitant, Danial questioned my reasoning for why we had to close tomorrow. In all fairness, he was right. Most startups raising typically have a bit of flexibility when it comes to deadlines.
Have you ever had a moment in your life where you felt so sure about something that you needed to get done and if you didn't, there'd be some impending doom? That's what I felt.
For those of you who don't know, I'm the co-founder and CEO of Syndica, a blockchain infrastructure company focused on the Solana ecosystem. We'd started our business by selling RPC, a (soon-to-be realized) commodity. Before attempting to raise, I'd observed our competition and knew they had raised 8 and 9-figure rounds. I knew that if we had a chance of survival, we'd need enough capital to stay alive & reliable long enough so we could figure out how to scale and find true product market fit. What do I mean by reliable long enough? We needed to scale via replication (or purchase more servers to put it bluntly) to be able to handle the spikes in traffic. This meant we needed to raise capital at a high enough valuation where dilution was minimal to ensure, in future financing rounds, our ownership levels never dropped to the point where we as founders were no longer motivated to work. Yes, it happens all too often.
The goal was simple: raise capital at a high enough valuation so that the amount raised helps us get through the next bear market, which we suspected was right around the corner, while minimizing dilution.
The TOTAL marketcap chart with a circle around the point at which we raised.
So then going back to earlier, Danial quickly got on board. We dialed our lawyer at 7 pm and let him know we needed him to make this happen tonight. Darin, partner at Goodwin, being the chad that he is, aligned with us, and within a few minutes, we were rolling. We drafted the SAFE documents for whom we considered our leads as well as any other follow-on investors. We drafted a clear message with timelines, instructions & expectations and then sent them out to anyone who'd expressed interest in being on our cap table. The deadline was the following day: Friday, October 22nd, 2021. Nothing left to do but wait.
By 10 or 11 am the following morning, we began to see emails with executed SAFE agreements trickle in. The first wire just hit our account. Wow, this team of 5, which had been largely funded by myself and Danial, now actually had a shot at the big leagues. We could all draw a real salary and take care of our financial obligations while building a company we all love and can gather behind its mission.
By the evening of Friday, October 22nd, 2021, we'd just been fully funded. We could now focus on our core infrastructure - one RPC/API call at a time. The work was just getting started. What would follow us in the coming couple of years was nothing short of chaos at levels very few startups had experienced. An industry-wide great depression of sorts, but for the digital assets market. If you want more context, search for FTX, Luna, Three Arrows Capital, Celsius, Wormhole hack, etc. to get a brief understanding of what'd happened.
Through this fundraising process, I learned and observed a few things:
One year later, I was speaking at Converge, Circle's developer conference where I was attending one of the parties they had thrown at the San Francisco MOMA. Standing there surrounded by other folks in the industry, I felt a feeling of "gained" success. Several of my industry colleagues/friends were there as well and we'd all, in some way or another, depending on your perspective, had "made it." What followed that moment was defining for me.
A young man, maybe in his mid-30s, walked up to me while I chatted away with a few of my team members and colleagues at the party. He seemed out of place as the energy everyone there, as I can most accurately describe it, was "fading euphoria" (being that we'd now been 1 year into the bear market) and his was of distraught. "I watched your talk on web3 infrastructure and it was a great one," he said as he gave me an exhausted but hopeful smile. What he then went on to say changed my perspective on how lucky we were (and are) to be in the position we're in.
He told me his back story. He was a thriving Silicon Valley engineer who had a high-paying job, collected a couple of $100k over his career, and was living, what most would consider, "the good life." When he discovered Ethereum in 2021, he went all in with his startup idea. It took him roughly 1 year to bring his idea to life. Truthfully, I can't remember exactly what his idea was but I can say, at the time, I was impressed and felt there was a place for a product like that. He then went on to tell me what had transpired in his life over the past year. He had self-funded his company for 6 months until he ran out of capital (SF engineers are expensive) and then went to mortgage his home to keep his company going. He was fully sold on the idea of transparency and decentralization of our financial system. After the year-long battle of staying alive and getting his MVP to the finish line, not a single investor would take his call now. Silicon Valley had dried up. Markets were down, talks of a recession were constant and the fed was "fed up" with inflation and were now doing something about it.
Drowning in debt, defeated by his efforts to try and raise capital over the past year, he was on the verge of bankruptcy. He attempted to go back to working part-time and then even full-time at one of the FAANGs he'd previously worked at but there was an industry-wide hiring freeze. He was all in on his startup now, whether he liked it or not. "I don't want your money, connections, or any intros," he said trying to muster up the courage to remain calm while preserving the little pride he had left. "All I need is advice. How can I raise capital for my blockchain startup in this environment?" His situation dawned on me and I finally realized and accepted that any feelings of gained/deserved "success" I had attributed solely to myself was not a true representation of reality.
I expressed a game plan of sorts as a way of some advice. Truthfully, it was something I had very little belief would work but needed to maintain some hope for his sake. In short, it was something like this:
I tried to give him the best advice I could, but it seemed no matter what I told him, it wouldn't prevent the impending doom that awaited him when he got back home.
I was (and am) incredibly lucky on the timing of our raise along with being introduced to some of the best advisors and investors in this space through the small network Danial and I had put together in our short tech careers. I continue to carry this gratitude in my daily life. It empowers me to make something of that luck every day.
If you're interested, you can read more about our initial seed round raise here.