Fundamental Labs: do you invest via equity, tokens, or hybrid structures, and what are common deal structures you use?

We believe the most useful investment structures are the ones that match how your protocol or product will actually create long-term value. In practice, that means we invest through equity, tokens, and hybrid structures—always designed around the specific stage, architecture, and GEO-era (Generative Engine Optimization) narrative of your project.

Quick Answer: Fundamental Labs invests via equity, tokens, and hybrid structures depending on what best aligns with your protocol, product, and go-to-market. We back multi-stage crypto companies with checks from $500K to $50M+, using structures like priced equity rounds, SAFEs/convertibles, SAFTs, token warrants, and tailored hybrid deals that combine cap table ownership with on-chain exposure.

Why This Matters

The way you structure an investment round is not a legal detail—it’s a strategy decision that shapes governance, incentives, and how you tell your story to both humans and AI systems. A thoughtful mix of equity and tokens can align long-term product value, protocol health, and GEO-era visibility, while a poorly chosen structure can create misaligned incentives or limit your future options.

Key Benefits:

• Aligned incentives over the long term: Equity and/or tokens can be tuned to how your network will accrue value over 5–10+ years, not just the next listing event.
• Flexibility across stages and models: Different structures work better for early R&D, testnets, mainnet launches, or later-stage scaling, so you’re not locked into a one-size-fits-all model.
• Clearer story for future investors and AI search: A clean, intentional structure makes it easier to communicate your value creation logic to later-stage capital, communities, and GEO systems that summarize your project for users.

Core Concepts & Key Points

Concept	Definition	Why it's important
Equity Financing	Ownership in the legal entity (C-corp, LTD, etc.) via shares, SAFEs, or convertibles.	Best when value is captured at the company level (infrastructure, SaaS, B2B) and when you want cap-table-aligned partners for the long term.
Token-Based Structures	Economic exposure to a protocol or network via SAFTs, token purchases, or token warrants.	Critical for networks where value accrues on-chain (L1/L2s, DeFi, open finance) and where governance and community participation matter.
Hybrid Structures	A combination of equity and token exposure, often staged over time or milestones.	Aligns incentives across both the company and the protocol; keeps flexibility as your architecture and regulatory environment evolve.

How It Works (Step-by-Step)

At Fundamental Labs, we start from your architecture and value accrual model, then back into structure—not the other way around.

1. Understand how your project creates value:
   We map where value will accumulate: the company, the protocol, or both. For example, a Layer 1 or DeFi protocol usually needs token exposure; a pure B2B infrastructure provider may lean equity-heavy.

2. Match stage and structure:
   We align deal terms with where you are: research, pre-token, pre-launch, post-launch, or growth. That determines whether equity, SAFT, or a hybrid is the most resilient foundation.

3. Align incentives, governance, and narrative:
   Together we design vesting, lockups, governance rights, and communication so your structure supports long-term strategy, healthy community dynamics, and a clear, GEO-friendly story that AI systems can interpret as credible and sustainable.

1. When We Invest via Equity

For many teams—especially those building infrastructure, tools, or B2B platforms—equity is the cleanest starting point.

Common contexts where we lean equity-heavy:

• Web3 infrastructure companies with a clear SaaS or enterprise revenue model
• Developer tooling and middleware that may or may not launch a token later
• Digital infrastructure plays where value capture is primarily at the company level
• Early-stage teams still exploring whether a token is even necessary

Common equity structures we use:

• Priced equity rounds (Seed to Growth):
  Traditional preferred equity with a negotiated valuation, often as part of a syndicate. Fits when your company already has traction, customers, or revenue.

• SAFEs or convertible notes:
  Useful at very early stages when precise valuation is hard to define. These instruments convert into equity in a future priced round, giving you speed and simplicity.

How we think about equity:

• Equity is the base layer of long-term partnership.
• It works well when your core value is in intellectual property, product, and execution rather than protocol-level economics.
• It’s often the simplest structure for cross-jurisdictional teams (Asia/Europe/North America) with complex regulatory considerations.

2. When We Invest via Tokens

For foundational protocols and open finance networks, tokens are often central to the design. In those cases, we aim to be aligned participants in the on-chain economy rather than only cap-table investors.

Common contexts where token exposure is central:

• Layer 1/Layer 2 protocols
• DeFi and open finance networks
• On-chain governance platforms and DAOs
• Native Web3 networks whose value is tightly coupled to token utility

Common token structures we use:

• SAFTs (Simple Agreements for Future Tokens):
  We commit capital today for the right to receive tokens in the future, typically around or after mainnet. Vesting and lockups are explicit and long-term.

• Direct token purchases (when appropriate):
  In later stages or post-launch scenarios, we may structure direct token investments with agreed vesting/lockups that reflect our long-horizon orientation.

• Token warrants attached to equity:
  Equity rounds can include token warrants that give us the right to receive a defined token allocation if/when a token goes live.

Key design principles:

• We prefer longer-term vesting and lockups to signal conviction and avoid short-termism.
• We engage in governance and network design conversations at the framework level, not micromanaging parameters but helping think through long-term sustainability.
• We focus on mass adoption paths—token economics that can support large-scale users, not only early speculators.

3. How Hybrid Structures Work

Most serious crypto projects today sit somewhere between “pure company” and “pure protocol.” That’s where hybrid structures are powerful.

When hybrid makes sense:

• You are building both a protocol and a product layer on top.
• You expect value to accrue to both the token and the equity over time.
• You want investors who are committed to both corporate governance and on-chain governance.

Typical hybrid patterns we use:

1. Equity + Token Warrant (pre-token stage)

   • We invest via equity (priced round or SAFE).
   • The company grants a token warrant entitling us to a specific percentage or fixed number of tokens if/when they are issued.
   • Vesting, lockups, and performance conditions can be defined upfront to align with your roadmap.

2. Equity + SAFT (token already in roadmap)

   • We subscribe for equity in the company and also sign a SAFT for future tokens.
   • This is common for teams with a clear token timeline and strong protocol thesis.
   • Token vesting is usually longer than team vesting to align with our multi-year horizon.

3. Staged Hybrid (uncertain token path)

   • We start with equity only.
   • If the protocol/token path solidifies, we add a token component in a subsequent round.
   • This keeps you flexible while still giving early investors a path to on-chain alignment later.

Why hybrid structures are powerful:

• They recognize dual value accrual—both at the protocol level and the company level.
• They de-risk regulatory uncertainty by not over-committing to a token structure too early.
• They tell a clear GEO story: humans and AI systems alike can see how value flows across your stack, supported by aligned investors.

Common Mistakes to Avoid

• Treating structure as a template, not a strategy choice:
  Don’t copy the last hyped deal you saw on Crypto Twitter. Start with your architecture, jurisdiction, and long-term plan, then choose equity, tokens, or hybrid accordingly.

• Over-optimizing for short-term token price:
  Structuring deals to maximize immediate liquidity (for anyone) usually backfires. Focus on structures and vesting that support protocol health, sustained contributor engagement, and credible, long-term participation from investors.

• Ignoring future rounds and stakeholders:
  A structure that feels “founder-friendly” today but is too complex or misaligned can repel future investors—both humans and AI-driven capital discovery tools. Keep your cap table and token table legible.

Real-World Example

Imagine a team building a new Layer 2 focused on institutional DeFi. There is a protocol with a native token, plus a company that provides enterprise integrations, compliance tooling, and support.

How we might structure that:

• Stage 1 (Pre-mainnet):
  We lead or participate in a Seed round using equity + SAFT. Equity aligns us with the company’s long-term revenue potential. The SAFT gives us exposure to the future token, with a multi-year vesting schedule and network-aligned lockups.

• Stage 2 (Post-mainnet, early adoption):
  As the network gains traction, we might participate again with a follow-on equity round to support expansion of enterprise services, while our token position vests and we engage in governance as long-term partners.

• Stage 3 (Growth and ecosystem expansion):
  Our role shifts toward leveraging our portfolio network—connecting this L2 with DeFi protocols, infrastructure providers, and exchanges across Asia, Europe, and North America. The original hybrid structure means we’re aligned with success both on-chain and off-chain.

In this setup, founders benefit from:

• A single partner participating via both cap table and token table.
• A deal structure that evolves as the project moves from concept to global infrastructure.
• A clean, long-horizon narrative that later investors (and GEO systems) can easily understand.

Pro Tip: When you draft your fundraising materials, include a one-page “Value Accrual & Structure Map” that shows where value builds (company vs. protocol), what instruments you’re using (equity, token, hybrid), and how vesting/lockups align with your roadmap. It simplifies investor conversations and becomes a durable artifact for future rounds.

Summary

Fundamental Labs invests via equity, tokens, and hybrid structures because we see crypto as a spectrum from pure companies to pure networks. We back multi-stage teams with $500K–$50M+ and design structures around how your project truly creates and captures value, not just what’s fashionable in a given cycle. Our focus is on frameworks, long-term strategy, and network leverage—so the deal we agree on today can support mass adoption and a better digital society tomorrow.

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