The Long-Lost Weirdness of the Social Internet and Fundraising: Finding Common Ground

The Long-Lost Weirdness of the Social Internet and Fundraising: Finding Common Ground

In the early days of social media, platforms like Myspace and Tumblr offered users a sense of individuality and customization that was unique to each person. These platforms allowed users to express themselves creatively and stand out from the crowd. However, with the rise of Facebook, the focus shifted towards conformity and mass appeal. People began to feel the loss of the long-lost weirdness of the social internet.

The decline of Tumblr, which was sold for a mere fraction of its previous value, and the nostalgia for Myspace highlight the desire for platforms that prioritize creativity and customizability. It is evident that there is a market for new social platforms that allow users to express themselves in unique ways. Three areas of interest in this regard are 3D creative expression, memes, and pseudonymity.

3D creative expression is an emerging trend that has the potential to revolutionize social media. By creating purpose-built 3D spaces, users can unleash their creativity and customize their online presence like never before. These spaces can serve as virtual universes where anything is possible, allowing individuals to stand out and express themselves authentically.

Memes have become a dominant form of communication in the digital age. They are the language of the internet generation, facilitating the rapid spread of ideas and cultural references. The internet has accelerated the speed at which memes are created and shared, making them an integral part of online culture. Platforms that embrace memes and provide tools for their creation and sharing will resonate with digital natives and foster a sense of individuality.

The shift towards individuality is a significant cultural change that has occurred over the past few decades. In the past, people sought conformity and fitting in, even going as far as giving their children popular names to help them blend in. However, the pendulum has swung in the opposite direction, and now people strive to stand out and be unique. Online platforms that allow users to adopt new identities and express themselves freely will thrive in a world where individuality is valued.

The return of Y2K culture, as seen among Gen Z, further emphasizes the desire for individual expression. This generation embraces the fashion, music, and aesthetics of the 90s and early 2000s, highlighting their appreciation for uniqueness and nostalgia. Social platforms that tap into this sentiment and provide avenues for self-expression will attract and engage this audience.

On the topic of fundraising and investors, understanding the different mechanisms involved is crucial for entrepreneurs. The concept of Simple Agreement for Future Equity (SAFE) has gained popularity as a fundraising instrument. A SAFE is not debt but rather a promise of future equity conversion. Different types of SAFEs exist, such as uncapped SAFEs and those with most favored nation clauses.

Valuation caps play a significant role in SAFEs, determining the price at which conversion occurs. It is essential to keep track of the amount sold on SAFEs and calculate dilution accurately. While optimizing for a high valuation cap may seem appealing, it is important to remember that fundraising is a means to an end, and over-optimization can be counterproductive.

In a priced equity round, the conversion of SAFEs into shares occurs based on the negotiated terms with the lead investor. The inclusion of SAFEs in the pre-money valuation affects the calculation of the series A price. It is advisable to avoid mixing SAFEs and convertible notes, as it can complicate the calculations. Starting with SAFEs can simplify the fundraising process.

Having a lead investor becomes crucial during the priced round stage, as negotiations become more complex. Typically, the lead investor aims for a 20% stake in the company, with the total amount sold usually around 25%. The options pool is traditionally around 10% post-money. Understanding the cap table and tracking dilution are essential for founders to have a clear understanding of the ownership structure.

In conclusion, the longing for the long-lost weirdness of the social internet and the need for platforms that prioritize individuality and creativity are evident. The rise of 3D creative expression, the dominance of memes, and the shift towards pseudonymity all point towards the demand for new social platforms. Entrepreneurs should be aware of fundraising mechanisms like SAFEs and the importance of a lead investor during priced rounds. It is crucial to prioritize self-expression, understand the cap table, and not over-optimize for valuation caps. By incorporating these insights, entrepreneurs can navigate the evolving landscape of the social internet and fundraising successfully.