Protocol Labs Blockchain Ventures Case Study | SproutVest

Overview

Client: Protocol Labs
Industry: Decentralized Infrastructure / Web3 / Venture Incubation
Project Duration: 12 months
Core Services: Venture Formation, Product Strategy, Entrepreneur-in-Residence (EIR) Leadership, Cryptography Commercialization

Protocol Labs, a global research and development organization behind projects like IPFS, Filecoin, and libp2p, sought to identify and incubate high-potential internal research initiatives into independent commercial ventures. One such project was drand — an open-source, publicly verifiable randomness beacon stewarded by the League of Entropy, a consortium of leading cryptography and research institutions.

To accelerate drand’s evolution from a free public research effort into a commercially viable venture, Protocol Labs engaged SproutVest — led by Erick Watson — through its Entrepreneur-in-Residence (EIR) program. SproutVest was tasked with evaluating the commercial potential of drand’s technology, defining a go-to-market strategy, and leading the spin-out process that ultimately formed Randamu.

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Challenges

Protocol Labs and the drand team faced a set of strategic, technical, and organizational challenges during the transition from research to venture:

1. Commercialization of Research Technology:
   drand was widely adopted as open infrastructure but lacked a monetization model or go-to-market strategy suitable for enterprise or blockchain ecosystems.

2. Defining Product-Market Fit:
   The team needed to identify concrete use cases — such as verifiable randomness for gaming, governance, and blockchain consensus — where drand’s technology could create defensible value.

3. Venture Structuring & Governance:
   As a project involving academic institutions and industry partners, drand required careful legal, organizational, and governance planning to ensure a smooth spin-out.

4. Stakeholder Alignment:
   Aligning multiple ecosystem stakeholders — including Protocol Labs, the League of Entropy, and future investors — required strong leadership, communication, and negotiation.

SproutVest was brought in to lead venture incubation, bridging the gap between research innovation and commercial execution.

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Solutions Implemented

SproutVest worked alongside Protocol Labs’ leadership, the drand core engineering team, and external partners to design a clear path from research initiative to commercial venture:

• Market Validation & Venture Thesis:
  Conducted in-depth market analysis across blockchain, gaming, fintech, and privacy-tech sectors to identify where publicly verifiable randomness could begin to unlock commercial demand.

• Product Strategy & Brand Development:
  Defined the core product vision that would become Randamu — focusing on secure, unbiased, and verifiable randomness as a foundation for Web3 infrastructure, gaming fairness, and off-chain verifiable compute use cases.

• Go-to-Market & Ecosystem Engagement:
  Engaged with potential customers and partners including L2 networks, DAOs, and game studios, validating early demand for drand-powered APIs and cryptographic services.

• Venture Structuring & Spin-Out Leadership:
  Guided the formation of a new Swiss-based entity, established the initial governance framework under the Swiss Threshold Association, and coordinated IP and team transition from Protocol Labs.

• Funding & Growth Enablement:
  Collaborated with Protocol Labs’ Venture Studio team to design the pre-seed funding structure, investor narrative, and strategic roadmap for the newly launched Randamu venture.

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Results

SproutVest’s leadership in providing an Entrepreneur-in-Residence resulted in a successful transition from open research project to venture-backed company with global potential:

• 🚀 Spin-Out of Randamu:
  Successfully launched Randamu, an independent company built on drand’s technology, focused on secure, decentralized randomness and encryption services for Web3 ecosystems.

• 💰 Pre-Seed Funding Secured:
  Randamu raised $3.3M in pre-seed funding, led by Protocol Labs Venture Studio (PLVS), establishing its operational independence and early growth runway.

• 🌍 Ecosystem Adoption:
  Expanded drand’s integration across blockchain networks, gaming platforms, and cryptographic infrastructure providers through the League of Entropy and Randamu’s SDKs.

• 🧠 Venture Readiness Framework:
  Created a first-of-its-kind repeatable venture incubation process for Protocol Labs — demonstrating how open-source research can be transformed into commercial, impact-driven startups.

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Why Web3 Innovators Choose SproutVest

SproutVest, under the leadership of Erick Watson, bridges the gap between research innovation and commercial execution. With deep expertise in product management, cryptography commercialization, and venture incubation, SproutVest helps early-stage technology projects evolve into scalable, investor-ready companies.

Key Strengths

• 🔍 Venture Formation Expertise:
  Proven success incubating startups from research environments into funded ventures.

• 🧠 Deep Technology & Web3 Knowledge:
  Hands-on experience with threshold cryptography, verifiable randomness, and decentralized compute systems.

• 🧩 Cross-Functional Leadership:
  Skilled at aligning technical, legal, and strategic stakeholders to achieve venture-ready alignment.

• 💼 Go-to-Market Strategy for Emerging Tech:
  Combines technical depth with business acumen to craft scalable GTM and monetization frameworks.

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Impact Summary

Through its partnership with Protocol Labs, SproutVest helped transform drand — a public-good cryptography project — into Randamu, a commercial venture advancing the frontier of secure, unbiased, and programmable settlement for Web3 ecosystems.

By blending research stewardship, venture formation strategy, and product execution, SproutVest demonstrated its ability to turn open-source innovation into sustainable business outcomes, setting a blueprint for future spin-outs within the decentralized technology landscape.