The dynamics between VCs and token-based startups

Abstract

This thesis examines how venture capital (VC) practices adapt when applied to token-based startups, a fast-growing but under-explored segment of the entrepreneurial ecosystem. Using a mixed-method approach, the study combines a structured literature review with seven expert interviews, integrating insights through a thematic analysis. The research develops a six-stage lifecycle model for token-based startups and formulates eight propositions comparing their development, communication, transparency, value-creation, investment structures, and governance mechanisms to those of traditional VC-backed startups. The interview findings broadly confirm these propositions while revealing additional nuances, such as iterative development loops, dual-audience communication challenges, market-infrastructure dependencies, and an expanded role for specialist VCs. The results show that token-based startups differ fundamentally from traditional ventures across organisational, financial, and strategic dimensions, and that industry practice is gradually converging with more established regulatory and business frameworks. The thesis contributes to emerging academic literature by offering a structured theoretical framework and providing empirical evidence on how VCs and founders navigate the distinct dynamics of token-based innovation.