UPDATED! ZAP Raises $15M: Are They As Promising As They Seem?

Original Article:

ZAP, a blast-based token launch tool with a substantial following of over 155,000, has recently raised over $15 million in financing. The project, led by its pseudonymous founder and CEO, Francis, claims to have reached a $100 million token valuation. However, despite its outward success, there are several reasons potential investors should approach with caution.

The Pseudonymous Founder & CEO Francis
ZAP announced it is nearing the completion of a $15.1 million financing round. According to Francis, the anonymous founder and CEO, the funds were raised in three stages: a $900,000 seed round in December 2023, a $2.1 million private round in June 2024, and $12.1 million in the ongoing "treasury sale." The structure of these rounds is based on a Simple Agreement for Future Tokens (SAFT) for the seed and private rounds, while the treasury sale resembles a node sale, offering buyers liquidity and other benefits from the yet-to-be-launched ZAP token, including token airdrops from other ecosystem projects.
Francis has projected that the total fundraising could reach $50 million if all vaults are sold by the time of their token generation event in the coming months. Investors in ZAP's early rounds include Rarestone Capital, Cypher Capital, Sharding Capital, Luca Netz of Pudgy Penguins, Larry Cermak of The Block, and Chelsea Jiang of Foresight Ventures. Notably, ZAP's valuation reportedly increased from $15 million during its seed round to $30 million in the private token round and is now estimated at $100 million.

The $100M Token Valuation: Unlaunched and Uncertain
The $100 million token valuation that ZAP boasts about is based on tokens that have yet to be launched. This raises significant concerns about the actual worth and potential performance of these tokens once they hit the market. Without a tangible product or proven track record, such a high valuation appears speculative at best and potentially misleading at worst. Investors should be wary of the hype surrounding pre-launch tokens, as their real market value can differ drastically from projected valuations.

Rarestone Capital: A Lead Fundraiser with a Dubious Record

Rarestone Capital, ZAP's lead fundraiser, has a diverse investment portfolio with 63 investments. However, the key figure here is their retail Return on Investment (ROI), which stands at a troubling 0.70x. This means that Rarestone Capital's investments often result in losses rather than profits for retail investors. The involvement of a lead fundraiser with such a track record should serve as a red flag for potential investors, suggesting that caution is warranted when considering investments in ZAP.

Myriad Of Reasons For Caution
With a pseudonymous founder who has never revealed their identity, a valuation based on unlaunched tokens, and a lead fundraiser known for making losing investments, there are myriad reasons for investors to be wary of ZAP. Despite its impressive follower count and successful fundraising efforts, the underlying risks cannot be ignored. Potential investors should conduct thorough due diligence and remain skeptical of the ostensibly promising claims made by ZAP before committing their resources to this token launch tool.

Addendum: Clarifications on Rarestone Capital's Investment Record

Following the publication of this article, Rarestone Capital's CEO, Charles Read, reached out to address inaccuracies and provide additional context regarding their investment record. Contrary to the data sourced from Cryptorank, which inaccurately reflects Rarestone Capital's investment performance, Mr. Read clarified that Rarestone Capital is a private venture fund with a substantial number of undisclosed investments. Publicly available data from sources like PitchBook and Crunchbase also present conflicting numbers of Rarestone's investments, further emphasizing the challenges in obtaining accurate public records for private funds.

Mr. Read highlighted that many of Rarestone Capital's successful investments, including those in JITO and Spectral Finance, have yielded significant returns, with some investments achieving 100x from their seed stage. These details were not captured by Cryptorank or other public platforms, which aggregate information from various sources, often without direct validation from the funds themselves.

Revised Perspective on Rarestone Capital's Involvement

In light of the clarifications provided by Mr. Read, it is essential to re-evaluate the statements regarding Rarestone Capital's investment record. The previous assertion that Rarestone Capital's investments result in losses for retail investors does not apply, given that the fund does not have retail investors or publicly available performance data. The inaccuracies in publicly sourced data should be taken into account, and investors are encouraged to seek direct information from Rarestone Capital for an accurate understanding of their investment performance.

Balancing Caution with Informed Decision-Making

While the initial concerns about ZAP's high valuation and the pseudonymous nature of its founder remain valid, it is crucial for potential investors to base their decisions on verified and comprehensive information. The involvement of credible investors like Rarestone Capital, despite the initial misrepresentation, indicates a level of confidence in ZAP's potential. Investors should continue to conduct thorough due diligence and consider all available information before making investment decisions.

Disclaimer/Footnote:

The original article contained inaccuracies regarding Rarestone Capital's investment record, which have since been clarified by CEO Charles Read. Rarestone Capital is a private venture fund, and the performance data referenced was incorrect. This appended article addresses the inaccuracies and provides a revised perspective on Rarestone Capital's involvement in ZAP's funding. Readers are encouraged to verify information directly with the respective entities for the most accurate and up-to-date data.

Coinlive welcomes parties to reach out in case of any discrepancies. We are committed to presenting a balanced and truthful account of the investment landscape.