Funding Your Web3 DevCo: VC Equity, Grant Money, and the Circularity Trap

Han Verstraete and Anton Kouprianov break down the two ways a development company actually gets funded — and the structural mistake that undermines both.

A DevCo burns cash. That's its whole job — building the thing. The question is where that cash comes from, and there are really only two answers.

Route one: VC equity, with shackles you can live with

Take equity investment and you inherit the demands that come with it: your DevCo has to be a vehicle investors will actually put money into. In practice that narrows you to three or four jurisdictions. Delaware is still the default — VCs have done this deal a hundred times over and expect the C-Corp structure by habit as much as by logic. The UK's limited company comes a distant second, comfortable for VCs, structurally similar to the C-Corp. Singapore trails further back, mostly relevant for Asia-facing raises. Switzerland's AG and Cayman's limited company both work, but expect US investors to ask why you're not just doing the C-Corp they already know inside out.

The upside: you burn VC cash, you don't turn a profit, and you owe no tax — because tax is only ever due on profit.

Route two: grant money, and the circularity problem

The alternative — sometimes combined with the first — is grant funding from the foundation that ran the token pre-sale or sale. The community, in its collective wisdom, decides your DevCo is a worthy recipient of a working-capital grant.

Here's where it quietly falls apart for a lot of projects: if you're both the visible team behind the decentralised setup and the owner of the DevCo receiving its grants, there's no real legal separation between the entity granting the money and the entity receiving it — even without formal cross-shareholding. That's circular, and it's exactly the structure a critic (or a regulator) will point to and say "this is not a third-party grant, this is you paying yourself."

The fix is independence, not paperwork

The clean version of this setup has a genuinely independent, token-governed decentralised stack where a sub-DAO — not the founding team — decides who gets funded. Anton gets a grant, Dan gets a grant, Han gets a grant, each running their own entity wherever they're actually based: Estonian company if you're working from Estonia, US company if you're working from the US. The independence of the granting body from the recipients is the entire point — get that wrong, and the rest of the structure doesn't hold up to scrutiny.