Superlayer: A New Web3 Venture Studio & Launchpad

A New Model for Venture Studios: SuperLayer and the Rise of Token-Based Projects

A novel venture studio has emerged, differing significantly in structure from established models. Unlike studios such as Atomic, Science, or Expa, which focus on equity appreciation for VCs, SuperLayer intends to launch consumer-facing projects utilizing tokens. These tokens will be freely tradable and usable across various projects.

Rather than conventional equity, these initiatives aim to enable users, creators, and communities to actively contribute to and benefit from network expansion. The core of SuperLayer’s strategy revolves around a blockchain network, RLY, previously developed by the founders, which they seek to popularize through innovative applications.

Web3 and the Changing Landscape of Venture Capital

This approach aligns with the principles of Web3, envisioned by early crypto enthusiasts as an internet owned by its builders and users, governed by tokens. However, many venture capital firms remain cautious about this evolving space.

Despite this hesitancy, a shift may be inevitable as more organizations like SuperLayer appear, often founded by experienced entrepreneurs. These emerging studios could potentially disrupt traditional venture capital models.

Kevin Chou and the Genesis of SuperLayer

The founder of SuperLayer is Kevin Chou, who previously sold his gaming company, Kabam, for $800 million in 2018. He quickly transitioned into blockchain technology, believing in its potential to create new economic opportunities, particularly for gamers and creators.

Prior to SuperLayer, Chou co-founded Forte, a blockchain gaming startup. He also co-created Rally, a platform allowing creators to launch their own digital currencies—essentially customized versions of the RLY coin.

Investor Support and Tokenomics

Chou has secured backing from investors including Coinbase Ventures and Andreessen Horowitz, demonstrating early success. The RLY coins, initially valued at five cents upon their creation of 15 billion, are currently trading on multiple exchanges at approximately $.052.

Currently, investors and the team control over three-quarters of the RLY supply, requiring them to either retain the tokens or risk a price decline. The long-term goal is for the community to hold 70% of the total supply as it is distributed over time.

This model has the potential to significantly increase wealth for both existing and new token holders. With only 7% of the coins currently in circulation, the market capitalization stands at $800 million. However, full distribution of the 15 billion coins at the current price would result in a fully diluted market cap of $7.9 billion.

The Challenge to Traditional Venture Capital

SuperLayer’s efforts to decentralize social token infrastructure are noteworthy, but the organization’s broader impact may lie in the challenges it presents to traditional venture firms. The complexity of token-based investments differs substantially from conventional equity investments.

This complexity is a key factor behind Sequoia Capital’s recent decision to register as a registered investment adviser. Roelof Botha, head of Sequoia’s U.S. operations, explained that this change increases the firm’s flexibility and allows for greater investment in emerging asset classes like cryptocurrencies.

Evolving to Meet the New Paradigm

Chou believes that more firms will need to adapt to remain competitive in this evolving landscape. He doesn’t necessarily attribute Sequoia’s restructuring solely to crypto, but anticipates a broader industry trend.

“In a world where there are these new types of technology platforms that are being created that are powered by these tokens with a very different business model and very different technology architecture,” Chou states, “smart firms recognize that they must evolve.”

A significant challenge for traditional funds, according to Chou, is the liquidity of investments. Once an investment becomes liquid, the firm must either distribute the cash to investors or provide them with shares, allowing them to decide whether to hold or sell.

The Crypto Ecosystem and Active Participation

In the crypto world, however, tokens acquired from one project are often used to participate in the growth of others. This requires active engagement, including buying, selling, and a willingness to be a patient participant. Few venture firms currently possess a comprehensive understanding of this dynamic, Chou suggests.

He predicts that firms may come to regret their lack of preparedness, as crypto founders are losing patience with traditional VCs, particularly as blockchains and their applications gain wider acceptance. Entrepreneurs are increasingly unwilling to spend time educating investors.

The Pain Points of Traditional Investment Processes

Chou emphasizes that the process of securing investment from traditional firms can be cumbersome. He notes that many have restrictions on tokens and require extensive guidance. His experience has involved numerous meetings with finance, legal, and investment committees simply to facilitate token delivery.

“We’ve had to spend a lot of time with finance [teams] that [have] never done a crypto investment,” Chou explains. Furthermore, assisting firms with token security and distribution to their limited partners adds significant complexity.

He describes the process as “really painful,” highlighting the need for venture firms to adapt to the unique demands of the crypto ecosystem.