Investment platform Echo claims to be secretly boycotted by some VCs, Dragonfly partner responds: Such conflicts are exaggerated
Echo, an angel investment platform founded by prominent crypto trader Jordan Fish, aka Cobie, says some VCs are hindering its success by pressuring crypto projects not to offer lower prices to Echo investors or by discouraging community sales altogether (except in late-stage, high-valuation rounds).
The concerns raised by Echo are not isolated. Matt O'Connor, co-founder of Legion, an ICO platform incubated by Delphi Labs, said that while Legion has not encountered much direct hostility, some VCs will push projects to avoid public sales due to regulatory risks and advise against discounted valuations and short vesting periods. "The vesting part is particularly ironic to me because VCs don't complain if the team airdrops tokens in unlocked form, but it becomes a problem when the team sells a small portion of tokens in unlocked form," O'Connor said.
Some VC-backed projects have successfully launched, such as MegaLabs and Initia. O'Connor said crypto AI project Almanak also recently sold on Legion at a price 10% below its VC round. However, he added that other teams, especially those that raised money from VCs 3-6 months ago, say their investors don't support similar discounts.
Cobie and O'Connor declined to name specific VCs they say are boycotting their platform. But Cobie said: "The general situation we see is that Echo gets some allocation in a round, then gets left out, and then the same project says their VC recommends a valuation of 3-5 times higher for Echo. Then we usually tell them to get out."
Some VCs will try to "block" the agreed-upon Echo funding round price if the price is lower than what they paid. "They seem to be very unhappy about it anyway," he said.
Shuyao Kong, co-founder of MegaETH developer MegaLabs, raised $10 million in 3 minutes on Echo last month, the platform's largest sale to date. She said she has also heard of projects being boycotted by VCs for undervaluing Echo investors.
Despite the allegations, several VCs downplayed the extent of the problem. Rob Hadick, general partner at Dragonfly, called the conflict between VCs and platforms like Echo largely “exaggerated.” He said the platforms complement VC funding, helping projects build stronger communities while maintaining partnerships with investors.
However, he added that lower-quality VCs (those that don’t provide real value) may feel threatened by the rise of these platforms, and “for those that do feel nervous, they will either adapt or go out of business.” Hadick also said that “tensions will likely continue to escalate with the public discussions on X,” but added that this is mostly “stories made up” by traders or angel investors for their own motivations and will not affect VCs or founders.
Anil Lulla, co-founder and CEO of Delphi Digital, holds a similar view. He described Echo’s claims as a “telephone game,” suggesting that claims of misunderstanding or isolation are exaggerated. Lulla said most prominent VCs encourage their portfolio companies to use platforms like Echo and Legion because such financing helps project distribution and is usually a small fraction of the funds raised. (The Block)
