George Galoyan, СЕО and founder at DAO.vc
In 2021, crypto startups attracted a record investment of $25.2 billion. It is more than over 7 previous years! As early as the first quarter of 2022, crypto startups managed to raise $9.2 billion which is the record maximum, exceeding the previous record (4th quarter, 2021) by 400 billion dollars.
461 deals with cryptocurrency startups were made since the beginning of the year, which is 60 deals more than in the 4th quarter of 2021, according to the CBInsights company research.
George Galoyan, investor and founder of the decentralized autonomous venture ecosystem DAO.vc, who has earlier raised more than $1.2 million for his own startup, gives effective advice on how beginner entrepreneurs can attract investment in their startups.
MVP is still the cornerstone of your crypto project. The product must be viable, demanded, innovative, and unique. All startups should use product analytics to comply with the market.
3 actions must be performed:
- Outline a problem, the market requires a solution for.
- Outline the product that can solve this problem.
- Create a business model you can use to make the product profitable in a certain period of time.
In order to avoid the trap of a popular misconception regarding loss aversion, your MVP must be seen only as a prototype up to the stage of the Client profile creation. “Crypto winter”, which lasted for 2 years, and the fall of the speculative crypto market by almost 95% showed that “utility tokes” were of poor usefulness.
It may require several dozens of interviews with potential clients in order to possibly refute your model and review a valuable offer. You’re ready that the target audience will not be your loyal customer at once, aren’t you? However, they can become your honest critics. Somewhere within this experience, you will manage to find a “problem-solution” suitable for your product concept.
If you want to attract investment during the token sale, you should work on the creation of a loyal and solvent community that will become the main token holder. Moreover, if the project plans to conduct token sales on launchpads or list the coin on CEX, you are desperately in need of an active community.
In order to attract, and more important, withhold subscribers in your social networks, you need constant interaction with them: share news, conduct AMA sessions, organize contests and giveaways; you should be highly open with your audience. In the end, it will enable the conversion of subscribers into customers.
Startup accelerators and project incubators are another way to not only fundraise but also gain support from experts. They offer entire startup support programs that will help you get a full “business packaging” and learn a lot from experienced mentors.
Accelerators usually carry out only a few limited enrollments a year, but at the same time, offer a chance to get thoroughly prepared for entering the market. Corporate accelerators look for and “pimp” products to be implemented in a specific (typically large) company, aiming to further get under its wing.
Venture funds are the companies that manage the funds of other organizations (pension foundations, corporations, banks) and wealthy private investors. Venture funds are interested in rapidly growing companies that have already overcome the Seed stage.
However, there is a special kind of foundations — seed ones, that purposefully invest in early-stage projects. Only isolated projects out of thousands, those that promise the biggest income under the most complex risk-taking, manage to pass through the “sieve”
The given chart shows the foundations that invested in the biggest startups in the world.
Some blockchain companies carry out their own financial programs aiming to support startups, including financial support. Nevertheless, a finished MVP, powerful team, and project development plan are required to get a grant.
You will have to fill out several forms and pass the interview in order to get financing from a donor company. Modern grant programs are realized by such companies as Harmony, Everscale, Polygon and others.
The modern crypto market is an aggressive, competitive, fickle environment that challenges freshmen. It is filled with finance and ideas, but still experiences a deficit of powerful teams, capable to realize these ideas.
Fundraising is a difficult though quite a real task. The main thing needed is a valuable product, a talented and involved team, and confidence in the result!