Centralized funding platforms have non-transparent terms and limit access to early-stage funding. They represent a classical example of an area that is ready to be disintermediated — software can do a better job and provide more equitable conditions for investors.
At Polimec, we are focused on creating a level playing field that is transparent and has a low entry barrier for all network participants. To do so efficiently, the first question to ask is: What does the current fundraising landscape look like, and what are the major issues?
“Access Denied”
Today, most projects looking to raise funds turn to a centralized platform that intermediates the process of connecting the project with investors and handles some of the administrative burdens. In turn, access to the project’s fundraise is restricted to platform clients and subject to their onboarding policies. Some participant types, jurisdictions, or communities might be excluded (even if the project itself would welcome them in theory). This may hinder the development and organic growth of a strong network — and building a collaborative and inclusive community is more important than ever for success in the age of bits and bytes. Global reach is hard to achieve since most centralized service providers follow the same list of “restricted” or “high-risk” countries.
Additionally, terms are not transparent for everyone when funds are raised through a centralized platform. This creates information asymmetry between investors aware of the terms and everyone else, which potentially provides an unfair advantage to those in the know.
From the point of view of a project looking to raise funds, two types of counterparty risks are also introduced: Financially, as funds are held with the centralized platform at least for some time, and reputationally, if the centralized platform turns out to be a bad actor and association becomes undesirable (2022 has unfortunately offered plenty of examples here).
Projects also risk long lead times and often have to accept opportunity costs (see our last blog post on Cost and Time Inefficiencies).
“Access Granted”
Polimec’s approach to creating a decentralized, transparent, and efficient fundraising process relies on two core pillars: automate what can be automated (powered by Polkadot and Substrate), and democratize access to funding through on-chain credentials that enable regulatory compliance while preserving data privacy.
Transparent terms for participation, transparent allocations, transparent vesting periods — retail, professional and institutional participants invest alongside each other at similar prices. A community driven due diligence mechanism also helps maximize the probability of success for the projects: Weaknesses are spotted early and can be improved upon, and the project is immediately bootstrapped with an engaged community. Projects also benefit from the smooth launch process, allowing for more time to be spent building out the project itself rather than losing it in the administrative jungle of raising funds.
In short, Polimec addresses and solves all of the most pressing issues with today’s centralized fundraising process, bringing crypto and its capital markets once again closer to one of the core principles — transparency and fairness for everyone.
