You might be wondering why a personal finance accountability app decided to start selling NFTs. To be frank, so were we.
Derek Gorthy, one of Enshrine’s co-founders, had a chance to sit down and talk with Ostrich co-founder William Glass and discuss why the startup decided to create its own fundraising option. In this article, we break down the Startup Rookie Card, why Ostrich created it, and give our take on their new offering.
Before we dive in, we’ll give a bit of background on Ostrich, the company that created the Startup Rookie Card. Ostrich is a personal finance accountability app that aims to make setting and achieving personal finance goals fun and approachable to everyone. They aim to provide users the tools to “build strong money habits with the support of your friends and an encouraging community.”
Earlier this month, Ostrich released their Startup Rookie Card — a limited release set of NFTs that give their early backers exclusive benefits.
Fundraising is a necessary (and usually cumbersome) activity that every startup must do. While many startups secure funding from venture capital or angel investors, some startups have attempted to crowdfund instead of selling off large chunks of equity.
While there are several differences between traditional fundraising and crowdfunding, the key differences are (1) startups that crowdfund typically do not offer equity in exchange for funding (although there has been a rise in direct equity offerings), and (2) startups that crowdfund rely on many small-dollar supporters instead of a few large investors.
Ostrich has received funding from outside before, but they decided to try out crowdfunding this time around. You can now purchase an Ostrich Startup Rookie Card — an NFT digital collectible that represents early support of Ostrich and its mission.
In their own words, you can think of the “Startup Rookie Card as a better version of a Kickstarter crowdfund. In a Kickstarter, you as a supporter receive an initial reward for your support, but then that’s the end of your relationship with the company beyond future marketing emails.”
In short, Ostrich wanted to offer their early supporters a way to provide financial support in the short term and stay involved after their startup stage.
At the time of this writing, Startup Rookie Card holders receive:
Please visit Ostrich’s official site to see a list of current benefits.
We were excited to see a traditional Web2 company decide to use Web3 technologies in a novel way. After talking with the Ostrich founders about their approach to crowdfunding and commitment to engaging with early supporters, we have three takeaways.
The below opinions are solely Enshrine’s — neither Ostrich nor its founders contributed to this section.
Raising capital directly from individuals by selling digital collectibles allows Ostrich’s supporters to support them financially without giving up equity in their company.
When fundraising from venture capital and angel investors, startups typically need to give up 5-20% of their equity in the first few rounds. Not only that, but legal fees for a Seed Funding round can be as high as $20,000, while legal costs for a Series A Funding round can easily exceed $30,000.
This direct-to-consumer offering costs only a fraction of this amount — all Ostrich must pay for the cost to process credit cards and mint the NFT.
There is no one right option for all startups, and traditional fundraising has advantages. However, we think that crowdfunding offers a compelling fundraising alternative that can be used in tandem with venture capital.
Ostrich could have started a fund on Kickstarter and called it a day. Frankly, it would have been easier to do so. So why did Ostrich decide to create NFTs instead?
We’ve discussed how NFTs unlock a new revenue channel for content creators, and the same principles apply here. In addition to the benefits of crowdfunding, NFTs give Ostrich a way to attach perks and utilities to the NFT — giving Startup Rookie Card holders a reason to buy and hold on to the card.
The combination of the real-world utility of the Ledger hardware wallet and digital benefits like in-app features and access to Ostrich office hours are a fantastic example of how to bring value to an NFT through utility. It’s not about the Ostrich art or the NFT (although bragging rights are pretty cool); it’s about providing exclusive members to those that decide to support Ostrich financially.
We also want to point out that Ostrich did a great job of staying on-brand by giving all Startup Rookie Card holders a Ledger hardware wallet — one of the best ways to keep your digital funds safe (we see what you did there, Ostrich).
Since we started Enshrine, we’ve recognized the importance of early supporters showing that they are, well, early supporters.
We’ve all been fans of a band, artist, or other creators before they blew up. But have you noticed that it can be difficult to actually prove that you were an early supporter? As Ostrich points out, their Startup Rookie Card gives supporters “bragging rights with irrefutable proof you were an OG supporter of Ostrich.”
This isn’t just a cool side effect of public proof; it’s also a way for the startup or creator to offer fans the ability to prove their fandom. Not only this, but Ostrich gives their early supporters unique and engaging benefits like a behind-the-scenes look at their new features before they’re released to everyone.
We all want to be rewarded for supporting creators and startups from day one, and we think that Ostrich did a fantastic job offering precisely that. If you haven’t already, please check out Ostrich and consider supporting them by picking up your Startup Rookie Card.