Lithium Raises Pre-Seed Round Led by Fuel Ventures

Here’s what this means for you…

Medley
Published in
6 min readMar 9, 2023

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It’s happening. We can finally reveal one of the most anticipated announcements in Lithium’s short history.

We’ve just raised our pre-seed round led by Fuel Ventures, a well-known and respected early stage focused VC in London. It’s been a battle getting here. Despite our strong user and revenue growth, we couldn’t have picked a worse time to raise funds, with both mainstream and crypto markets completely tanking.

But here we are, and we’re now ready to share what this means for you 👇

No More Treasury Sell Downs 🥳

Lithium started as a launchpad with decent success. However, the narrative has shifted and the founding team believes that launchpads will fail (at least token-gated ones). The barriers of entry for competitors are too low, the network effects are too small, and not enough value is added to founders and investors.

We had this realisation around September of last year, and we decided to do what all startups do when faced with the realisation they’ve built a product no one wants: we pivoted. Lithium is now an end-to-end tool to grow and manage your community, and people love it. We have clients paying good money and appreciating the value we add. It seems we made the correct decision.

Making this decision meant that from September until recently, we had to use Treasury funds to invest in product development. This (among other macroeconomic developments — did someone say FTX?) caused the price of $IONs to fall. With no buy pressure to counter the sell pressure, this was inevitable. Many thought we should not sell the token, that we should sit on the launchpad we had and hope for another bull market. While this likely would mean a higher $IONs price right now, it would mean a fundamentally weak and uninvestable business. We decided to be proactive, make a bet on the market as we see it, and build an incredible product that solves a real problem.

We have now raised enough cash to fund development (at a rapidly faster pace, more on that later) for at least a couple of years. Every $IONs holder will benefit from this development, knowing they’ve already borne the cost of the sell downs. There will be no more treasury sell-downs.

Buybacks and Burns 🔥

We’ll be using revenue from the product to strategically buy back the tokens we’ve had to sell to fund product development. There will be no formula here: it will depend on the market sentiment and whether we think there is a good return on investment in terms of project exposure °(i.e. new users) from positive price action. Every month, we’ll assess the financial state of the company and decide to what extent to buy back tokens. We may bring in more of a consistent process baked into the token. More on that later!

For the most part, bought-back tokens will be burned. As we have no intention of using the treasury to fund development anymore, burning is a way to increase price by removing supply. Again, this will be done if we see a clear ROI to the business fundamentals of having positive price action, and the exposure that could bring.

Product Development 🛠

We took the Lithium platform from a crowdfunding platform to where it is today, with 2–3 hours/day of a (very good) developer's time. That’s about 300 man-hours over a 6-month period.

We now have two incredible developers working full-time on the project, with plans to hire a third in the second quarter of this year.

Over 6 months, two developers will put in over 2000 man-hours. That’s nearly 7x the input. Look at what we’ve done with 1x over the last 6 months, now multiply that by some factor around 7. You get the idea, product speed is going to be blazing fast.

Been a while since I’ve had to use A=πr^2…

But it’s not just about the speed of development, we’re not about to become a feature factory, churning out poorly thought-through products that don’t add value. With our product pedigree, we’ll ship stuff our clients and users actually want, and craft a product that solves a completely unmet need in the community building space.

Token Utility ⚙️

We know a lot of you are frustrated about the lack of token utility, and we’ve not shied away or tried to hide the fact that right now the utility of the $IONs token is limited. The token was designed for a crowdfunding platform. The product has changed, and we haven’t had the resources to change the token with it. Rest assured, that will change this year.

As part of our 2023 roadmap, we’re going to devote serious time and cash to getting the token right. $IONs will slot seamlessly into the Lithium experience. We’re not rushing into this for a few reasons. The main reason is that our primary focus is building an incredible platform for our clients and a defensible business. We need to get the basics right in the form of a self-serve platform that provides exceptional value. In the short-term, this is the absolute priority.

Check out the full roadmap post

The second reason for waiting until later in the year to fix the token is simple: the longer we wait, the more likely we can bake true utility into the token because we’ll have a better idea of what people are using our platform for, and what kind of utility token holders want. We know it's a pain to wait (you want to get real use out of your $IONs) but trust us, it will be worth it!

Further Rounds 💸

Now that we’re on the VC hamster wheel, there will be future rounds of fundraising. We believe the opportunity to serve communities is massive, and that this market will be winner takes all. KPMG Acceleris will be leading the process for Lithium’s Seed round, which will unlock probably 3–4 new developers and a full sales team. Our AWS Startup Accelerator is also helping us define our narrative for the upcoming Seed round, which is being raised to develop some seriously exciting under the hood tech, as well as achieve scale and distribution of the business.

If you're confused about all this talk of pre-seed, seed, series A, etc. here’s a little graphic to explain the various round

Conclusion

In short, we think the bottom is behind us. With a good runway, a strong team, a clear mission, and no more sell downs, we’re fairly confident the $IONs token will start to perform better, especially when we bake in the real utility later in the year.

Tl:dr

  • Fuel Ventures, an established and renowned VC shop have led Lithium’s pre-seed round
  • No more treasury sell downs
  • Treasury will start buying back and burning tokens strategically
  • Development input has increased 7-fold with new hires
  • KPMG Acceleris leading the next VC round
  • We’re going to the moon (NFA)

WAGMI

Team Lithium x

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