Most gaming projects don't talk about money. They'll show you trailers, roadmaps, tokenomics decks, and Discord countdowns, but they won't tell you what it actually takes to keep the lights on while building the game.
Ethan Watson is VS Protocol's Head of Growth. His job right now comes down to one thing: raising the capital the team needs to keep building. We asked him what that looks like in 2026, and he didn't sugarcoat it.
Who is Ethan Watson?
Before VS Protocol, Ethan spent time across marketing and business development in NFT projects and startups, eventually heading up sales in others. His fundraising career started when he helped a friend raise $250K out of Hong Kong, which turned into a full year of connecting investors with startups as a middleman.
That experience gave him a front-row seat to how capital actually moves in Web3. What gets funded, what gets ignored, and what kills a deal before it even starts.
"Right now, my focus is raising capital for VS Protocol to continue growing and operating. User growth comes after funds are raised."
His day-to-day is split between paying the bills with a regular job and pitching VS Protocol at every opportunity. Every VC conversation, every event, every networking call is a chance to get the project in front of the right people.
The Market Right Now
We asked Ethan to be straight about the fundraising landscape for Web3 gaming in 2026. He was.
"Brutal. No investors or firms are writing checks. They are all bleeding money. They want to see revenue generating before writing checks."
That one word sums up what a lot of founders in the space are feeling but won't say publicly. The hype cycle from 2021-2022 burned a lot of VCs. Projects raised millions, shipped nothing, and now the entire space is paying for it. Investors got burned, and the ones who survived are sitting on their hands waiting for proof that a project can actually make money before they commit.
So who is actually funding things?
"Mainly gaming incubators like Animoca, or getting grants from foundations like Avalaunch. You build on their chain or get incubated under their name. It builds off their reputation instead of yours and gives a huge boost in the space."
The playbook has shifted. Traditional VC rounds are harder to close. The money that is flowing tends to come from ecosystem funds and incubators who have strategic reasons to fund projects, not just financial ones.
The Chicken-and-Egg Problem
Investors want revenue and active users before they invest. But you need funding to build the product that generates revenue and attracts users. Every early-stage founder knows this loop.
"We build as much proof of work and momentum as our limited budget allows, go to smaller VCs for smaller checks, and continue to build up on that."
There's no hack here. You build what you can, show what you've got, take the small wins, and stack them until they become big enough to move the needle. That's the reality of bootstrapping a game when the market isn't in your favor.
When we asked about the hardest rejections, Ethan kept it simple.
"It's mainly due to market, honestly. Not much to change besides increased users and revenue."
The pitch isn't the problem. The timing is. And that's a harder thing to fix than a slide deck.
Why Equity, Not a Token
In a space where most projects launch a token and let retail traders determine their value, VS Protocol went a different direction. The team is raising $1M via a SAFE (Simple Agreement for Future Equity) at pre-seed stage. No token sale. No public mint. Equity.
"VS Protocol does not want its value attached to a token for retail or market makers to abuse. The psychology behind a lower-value token does not equal the true value of the game."
It's a deliberate choice. Token launches create short-term liquidity but long-term headaches. Price dumps, community panic, market manipulation. Ethan and the team would rather build value in the company itself and let the product speak for what it's worth.
Where the Money Goes
If that $1M landed tomorrow, where does it go?
"Mainly dev costs and sponsoring prizes for our competitions."
Development costs cover the pipeline Albert Barry outlined in our previous article: marketplace assets, freelancer commissions, custom code, and the infrastructure to keep a multiplayer shooter running. Prize sponsorships feed the competitive ecosystem that drives player engagement and retention. Both are directly tied to growth.
Gaming First. Blockchain Second.
The 60-second pitch. Every fundraiser has one. Ethan's is straightforward.
"Gaming first, blockchain second. We focus on onboarding Web2 gamers into Web3 without them even knowing. When they want to claim rewards? That's when they need to sign up into the Web3 world."
Most Web3 games lead with the blockchain. Wallet connect on the landing page. Token gating before you can play. That approach filters out 99% of gamers who don't have a wallet and don't want one. VS Protocol flips it. Play the game. Get good. Earn rewards. Only then does the blockchain part matter.
We asked Ethan if he thinks other projects get this backwards.
"Yes. They don't focus on the paying user, they focus on the product. And because of that they are unable to scale."
Building a great product means nothing if nobody is playing it. The user comes first. The technology serves the user.
Overcoming the Reputation Problem
Web3 gaming has a trust deficit. Projects that raised eight figures and delivered nothing have made every new project guilty until proven innocent. We asked Ethan how he handles walking into that room.
"You need to show you're different and why you would succeed. Simple as that."
No elaborate strategy. No spin. You show the work, you show the product, and you let the investor decide. That's all you can control.
Transparency is the New Gold
When an investor asks "why not just build a normal game without blockchain," Ethan has a one-liner.
Blockchain lets players verify that the game economy is fair, that rewards are real, and that the system works the way the developers say it does. In a world where every live-service game is accused of rigged loot boxes and hidden mechanics, on-chain transparency becomes a competitive advantage.
How to Get Involved
Ethan's final message to anyone reading this who has capital and is looking at the Web3 gaming space:
"Play the game yourself, then you'll understand."
The process is simple. Reach out, hop on a call, review the deck, discuss terms, and sign a SAFE. No complicated token vesting schedules. No lock-up drama. Equity in a company building a real product.
INTERESTED IN VS PROTOCOL?
VS Protocol is raising a $1M pre-seed round via SAFE. If you're an investor, fund, or ecosystem looking to back the next generation of competitive gaming, reach out directly.