by Elias Mendel
As an emerging web3 founder, one core need, along with many traits required to persevere, and ultimately succeed, is startup capital. While raising money is not part of the operating business side, founders spend a fair chunk of time searching for and trying to persuade potential investors. To facilitate the founders’ quest to secure funding, we decided to compile a brief guide containing some of the most well-established means to attract investors.
Table of Contents
1. Is it the right time to initiate the fundraising process?
2. Generally, the more mature your startup, the more you have to convince investors through hard facts and numbers
3. Outreach Means to Find Investors
Networking and Social Media Platforms
Ecosystem Development Funds & Grant Offers
Is it the right time to initiate the fundraising process?
Fundraising is a milestone every startup faces on its journey from a mere idea to a fully thriving business. Its importance is even more pronounced during the initial incubation phase and the subsequent acceleration stage. Each phase has its own unique needs, and understanding them is key to successfully securing the funds your startup requires to keep growing. In this article, we provide you with insights into the different stages of fundraising and how to effectively approach them.
From seed funding that lays the groundwork during incubation to the crucial Series A, B, and C, rounds, and beyond during the acceleration phase, each fundraising stage comes with distinct strategies, opportunities, and challenges. Knowing what potential investors are seeking, determining the right amount to raise, and understanding when to transition to the next stage is paramount.
Generally, the more mature your startup, the more you have to convince investors through hard facts and numbers
If you are pitching for a Series B round, investors will want to see strong revenue (growth) numbers, and first hunches of how you might reach profitability a few years down the line, while keeping an eye on the unit economics. Then again, if you are asking for funding in the (pre-) seed stage, you need to sell your vision, what your startup could be like one day, how you plan on getting there, and most importantly, whether you are the right founder team to execute and lead the vision. So please bear in mind that the outreach process varies with your startup’s stage.
The more traction and size your startup gains, the more it can prove itself worthy of an investment. Therefore, investors will be more keen on reaching out to you, as you have successfully survived the first, very lethal years of every startup, giving you additional credibility. On the other spectrum, if you are just kicking things off, it is fully on you to convince investors to give you capital. After all, they are taking a big risk, as, in terms of tangible successes, you have very little to show for. That is why selling yourself is of utmost importance, especially if you are a young startup without a track record.
In that case, it is prudent to stress that some basic prerequisites ought to be on point before even thinking to engage in investor outreach. Even as a young pre-seed startup, ensure you have a decent-looking website and an appealing LinkedIn profile. Most importantly, a spot-on pitch deck that you can send to potential investors is highly useful. Potential investors can receive hundreds of pitch decks every week and spend only very little time on each, quickly separating the wheat from the chaff. Have a look at our article “The Optimal Fundraising Pitch Deck” to check out our pitch deck best practices and download a free template you can use yourself. With that said, let us have a look at how to attract investors.
So without further ado, here are our suggestions for reaching investors.
The most effective way for you to find new capital for your venture would most likely be through a “warm intro”. That is if you know someone who has already received funding from a VC, angel, incubator, or accelerator, and they agree to make the intro, you have already made a crucial step. The investor has taken awareness of you. The fact that your contact has made the intro has already given you a sense of credibility, as they would not risk their relation with the investor by recommending an illegitimate, or simply poor venture.
While tedious and a rather “unsexy” means of conducting outreach, it cannot hurt to attempt contacting potential investors through yet another channel. There are a bunch of websites, which, for a fee, give you access to relevant email contacts. For example, have a look at this article comparing different E-Mail list providers.
Networking and Social Media Platforms
While this might seem like no big surprise, from our own experience, LinkedIn remains a great way to engage in outreach at scale. However, it is important to mention that it can become a tedious task depriving you of your mental energy and time too — as with many things in life, it is a fine line. Make sure the networking does not collide with your deep work sessions, and schedule selected times for it. External tools like Dripify, LeadConnect, Cleverley, etc. can help automate the outreach process. If you can afford it and want to focus on other tasks, also consider working with a marketing agency that can do the outreach process for you, thus freeing up more of your time for other operating tasks.
Demo Days are a great way to mingle with fellow entrepreneurs and VCs, accelerators, and angels. The teams pitching at demo day will be assigned a speaker slot, usually not more than 10 minutes to wow the audience and hopefully set the foundation for the next round of investments. And even if you do not manage to secure further funding, you will still have chances to build new partnerships, find potential new employees, see what the competition is up to, and further your ties in the web3 community. Sometimes, event organizers might also ask you for a participation fee.
Conferences are very akin to Demo Days, and even though you might not necessarily get to pitch your idea, you can still network with fellow founders, web3 enthusiasts, fund managers, and investors. You might also want to consider renting a booth for your startup to further your presence. Our partners at Epic Web3 have drafted a fantastic overview of web3’s biggest conferences.
If you got a team of brainy devs and designers, hackathons could be an excellent fit for you. Join other teams of developers as they pull all-nighters to build their smart contracts, test their code and work on their dApp UX. Hackathons can serve as catalysts, connecting you with like-minded web3 tech devotees, the hackathon hosts, and their network — usually well-renowned blockchain ecosystems. For example, take a look at ETHGlobal, Solana, Polygon, Polkadot, and others. One of our portfolio companies, Clamp, just recently successfully partook in ETHTokyo, winning multiple awards. Your startup will most commonly have to pass a screening test before making it to the next application round.
If you feel that a couple of months of close mentorship, product and legal advisory, access to an expensive network, market intelligence, workshops, and potential funding can lift your idea or startup to the next level, then an incubator or accelerator program would be a good fit for you. To clarify — accelerators are for those who already typically have a team and MVP in place, whereas incubators are for those who have neither yet or are very early (around the ideation stage). For more information, see our guide “Startup Incubator vs Accelerator vs Company Builder vs Venture Studio”.
Of course, we would be thrilled for you to apply to one of our programs (which, by the way, are free of any charge whatsoever). Take a look at our application hub.
Ecosystem Development Funds & Grant Offers
Many ecosystems within the realm of web3 entice early-stage teams to build on their chain and spur growth and provide grants that you can apply to receive, given that you meet certain criteria.
In addition, our dear colleagues at WeDataNation, who have received funding from the OceanDAO, have drafted a guide on how to fund your startup the “decentralized way”.
Another potentially lucrative way to raise awareness about your venture, thus ultimately attracting investor interest, could be to create content, actively putting out value for free. This could go from drafting an insightful LinkedIn post or Reddit threat to publishing a research report or recording an interesting podcast episode. With that in mind, make sure to find a niche that you can focus on — today’s internet users are already flooded with information as is, so find a void that you can and want to fill, and then fully focus on that. Possibly Google Trends & Keywords can be of use to you in that regard. Also, bear in mind that, unless you are a media company, content creation is just a means to a purpose, so refrain from neglecting (more important) operating tasks just for the sake of publishing yet another article or podcast.
As we all know, Discord is the place for web3 enthusiasts to mingle and exchange ideas. There are plenty of communities dedicated to crypto, covering market news, trade setups, and also entrepreneurship. You will find communities where you can search for new team members and might be able to network with investors. Generally, use those servers as a platform for you to increase your credibility, i.e., by actively providing added value to the other members, and making a name for yourself. For example, have a look at “8 Best Web3 Discord Servers to promote your brand”, “7 Best Web3 Discord Server/Community”, or “Web3 Discord Servers”. And even beyond the realm of web3, there are a bunch of entrepreneurship-dedicated Discord channels, and you can find an overview here at the “Discord Servers for Founders”.
About Blockchain Founders Group
Blockchain Founders Group (BFG) is the driving force behind web3 innovation. As a company builder, we bring together a team of blockchain visionaries, experienced entrepreneurs, and industry experts, all committed to nurturing emerging talent. Our BFG acceleration programs serve as your springboard for launching blockchain startups, transforming concepts into reality in just 2–3 months. Each cohort develops 5–8 unique web3 ideas, and selected projects will be financially supported with 70,000–100,000 EUR, along with access to our extensive network. Join us in shaping the future of web3!