Is the meme-ification of VC no longer in favor? Has the "KOL cycle" become a fast and effective financing and marketing technique for Web3 startups?

In the Hong Kong Web3 Carnival dominated by the Chinese community, one of the hot topics of discussion is the "KOL Round." This new term originates from the fundraising stages of startups such as seed rounds, A/B/C/D rounds, which are defined based on the development stage and fundraising scale of different companies.

Web3 borrows this concept and targets early fundraising at Web3 KOLs (Key Opinion Leaders) who manage communities, offering them early investment discounts and conducting market marketing through KOLs. "KOL Round" has become a necessary part of recent startup projects, increasing KOLs' sources of profit.

This phenomenon has also sparked many discussions:

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• Is seeking KOLs better than venture capital firms?
• Will startups end up exploiting KOLs instead?

VC Memefication, KOL VC-ification

With the meme coin frenzy, a peculiar phenomenon has emerged. Public chains claim to support meme coins, with VCs hosting meme coin competitions and analyzing the usefulness of meme coins, referring to them as "memefra" meme infrastructure. These institutions seem to no longer be confined to Web3 projects with "practical use or planning," but are embracing meme coins favored by the masses.

Avalanche Protocol announced the official meme coin collection standards, indicating that they have begun buying meme coins.

Is meme coin the battleground for public chains? BNB Chain announced a meme coin developer competition.

Chinese KOL @nftbanker shared his thoughts on his recent activities in Paris here: "VCs are starting to meme-ify, and KOLs are starting to VC-ify. Conditions for unknown European and American funds are four times worse than those for KOLs. They don't understand how Chinese people can raise funds overnight with just an Excel sheet while they are still waiting for the lock-up period. These KOLs have already made money. Some KOLs who have just graduated from Chinese universities have become the fastest, most frequent, and earliest cash-out VCs in this bull market."

Perhaps influenced by meme coins, new projects are now focusing on KOLs. What advantages do KOLs have?

KOL Advantages Second Only to First-Line VCs?

Investor Jayson @jaysonhu2018 believes that KOLs bring benefits to new projects second only to first-line VCs.

Compared to VCs, KOL communities make decisions faster, quickly deciding on investments and delivering funds, whereas VCs spend more time and effort on internal processes and decision-making. The funds invested by KOL communities are not necessarily less than those of VCs, equivalent to the level of second-line VCs.

"Pooling tens of thousands or even millions of u among a few KOLs to invest in a single project is quite normal," @jaysonhu2018 stated.

KOLs' lock-up conditions involve marketing commitments, and the exposure and resources they bring to new projects are no less than those of VCs.

Second-Line VCs Are Not Necessarily Better Than KOLs

@jaysonhu2018 believes that many second-line VCs are only relying on relationships for target selection and may not necessarily be better than independent KOLs. KOLs in the community ecosystem of survival of the fittest have also cultivated a certain "good eye."

Is KOL Round Just a Low-Level Marketing Activity? Will It Be Cut Instead?

However, some believe that the KOL round is still just part of VC marketing.

Researcher Chen Jian stated that the claim "KOL > VC" mainly stems from KOLs receiving lower valuations than VCs and better unlocking conditions than VCs. However, the "KOL round" has a very low budget and KOLs have to endure emotional blackmail from some new projects, meaning that KOLs not only spend their own money but also work for the new projects. Compared to institutions, they only get a few breadcrumbs.

Blockchain founder Colin Wu stated that many KOL rounds are actually driven by VCs, and the two complement each other. KOL rounds have high valuations, fast unlocks, and low budgets; VCs have slow unlocks, low valuations, and high budgets. In reality, without endorsements from well-known VCs, KOLs probably wouldn't dare to invest. The claim "KOL > VC" may be exaggerated. He believes that the phenomenon of "KOL rounds" shows that VCs are starting to operate traffic.

Taiwanese investor Woody explained that understanding the "KOL round" is simple; it's just part of the marketing budget. The tweets on Twitter are quite standardized, and many KOLs have received similar requests. Allowing KOLs to exit first and with a small share, they are not easily cut. These are just promotional expenses for new projects.

Woody suggested that some "KOL rounds" should not be accepted, for example, those with excessively long lock-up periods that may end up losing money, or those with poor quality that are not worth the hassle, or those that unlock simultaneously with institutions, essentially handing over their communities to institutions.

KOL and Fans' Free Market

Many cryptocurrency investors often lack time to research and experience to judge investment targets. KOLs play a crucial role in providing advice, and the emergence of the "KOL round" also demonstrates the influence of KOLs in driving investment promotion.

"What to buy to make money?" As long as they can answer this simple question for investors and make the masses feel satisfied, they can accomplish the task.

KOLs bear financial and reputational risks, and fans can judge the character and performance of KOLs on their own, choosing targets in a free market. The "KOL round" and similar activities based on the role of investment advisors providing promotional budgets are now an important part of the current cryptocurrency market.