Web3 Incubator Investment: Opportunities and Challenges Coexist

Recently, the Web3 investment sector is undergoing a paradigm shift. As traditional exit paths are hindered and valuation systems are being restructured, more and more investment institutions are shifting towards an incubation investment model. This model is no longer just about financial support; it directly integrates resources, capabilities, and networks to assist projects in growing from the ground up.

The core of incubative investment lies in deep participation. Investors are no longer just simple providers of funds, but become partners of the project. They need to invest time and energy, bear operational pressure, and even the boundaries of legal responsibility with the project party become more blurred.

This investment model typically includes the following key components:

1. Ecological Empowerment: Integrating resources such as traffic entry, wallet integration, and community user import.

2. Technical Support: Providing professional services such as underlying architecture optimization, security auditing, and product testing.

3. Marketing: Responsible for content marketing, community operation, and joint event planning, etc.

4. Compliance Collaboration: Conduct pre-investment due diligence, assist in license applications, and provide legal consulting, etc.

However, this deep involvement also brings more legal challenges and risks:

1. Blurred identity boundaries: Investors may be seen as the "de facto controllers" or "shadow directors" of the project, bearing more legal responsibilities.

2. Diverse revenue paths: Diversified revenue models may involve unlicensed securities issuance, violations of dividend regulations, or tax issues, among others.

3. Token-related risks: The issuance and circulation of Tokens still face different regulatory attitudes and legal risks in various countries.

To address these challenges, investors need to take the following compliance measures:

1. Establish an appropriate investment structure, such as a Cayman SPV, BVI holding company, or Singapore exempt fund structure, to isolate personal risk.

2. Focus on "de-securitization" during the Token design phase, avoid promising fixed returns, and highlight the practical functions of the Token.

3. Choose an appropriate legal jurisdiction based on the target market, and consider regulatory requirements and compliance pathways in advance.

Incubation-type investments are suitable for those investors who are willing to participate long-term and have rich resources and collaborative capabilities. It not only offers the potential for high returns but also provides an opportunity to grow together with the future of Web3. However, this model may not be suitable for investors seeking high liquidity or low engagement.

In the constantly evolving Web3 industry, incubation investment undoubtedly provides investors with a new way to participate. However, it also requires investors to possess more comprehensive skills and a more prudent risk management awareness. Only by fully understanding the opportunities and challenges can one succeed in this field, which is full of potential yet fraught with risks.