It’s no secret that venture capitalists react to prevailing market conditions when making decisions, and amid global economic uncertainty, entrepreneurs in all industries are finding that venture capital funds are harder to come by in these days. This is especially true for cryptocurrency and blockchain companies, which have to overcome not only a knowledge barrier, but also lingering fears about recent misbehavior from certain high-profile cryptocurrency founders and companies.
Cryptocurrency pioneers who got used to a free flow of VC cash during the industry’s heyday may need to adjust their mindset and approach to succeed in finding funds in today’s market. Here, 12 members of the Cointelegraph Innovation Circle share tips to help crypto and blockchain companies move forward as VC funds become less generous with their investments.
Make sure the first meeting with the front end feels familiar
We have thought carefully about the user flow for our apps and demos, with a testnet behind our first app. Our goal is for users to understand that blockchain-based decentralized applications are simply the next generation of applications, with special properties on the back-end, so your first encounter with the front-end should feel familiar. Only then will we dive into the block explorer and the code, if you wish. –Stephanie So, Geeq
Stop focusing on the chips
The first thing a crypto or blockchain company needs to do is stop focusing on tokens. The primary focus, regardless of the cycles, should always be on creating a high-quality product and the effort to create traction and demonstrate that the product fits the market. –Sami Rusani, Rusani Ventures
Focus on delivering customer value
Remember: you are building a business, not a hype machine. Businesses have revenue, profit, customer acquisition and retention costs, etc. Understand what real problems you solve, who your customers are, how you will find them, and the value you create for them, especially relative to your competition and alternatives (like Web2, Fiat, etc.). Focus on delivering customer value, and the rest will follow. – Xinglu Lin, Fog Works, Inc.
Being able to demonstrate the versatility of your solution
As a fund manager, I’ve found that those who are successful in raising funds do the following: Demonstrate that their solution is versatile enough to pivot into the niche the industry needs most. For example, my last two investments have been in infrastructure projects focused on improving the know-your-customer features of decentralized finance and gaming protocols in light of upcoming regulatory pressure. – Carlos Gomez, Belobaba Crypto Fund
Prepare your deck and demos, and ask for a reasonable valuation
Have your ducks in a row. Many cryptocurrency founders who were in the bull market are lazy when it comes to approaching venture capitalists. They don’t have a proper cover. They do not have product demos. Above all, don’t ask for a crazy valuation with a long award schedule. Crazy, unwarranted valuations and long vesting schedules don’t sit well with investors in bear markets. –Brian D. Evans, BDE Ventures
Show your passion for your project
The best advice I can give to a crypto founder looking to raise funds right now is to show VCs the purpose of your project. I think all of us, especially investors, are now looking for honest, inspiring and value-driven projects. Show them your passion and why they should be excited. It’s time to weed out the bad players and focus on those in the ecosystem that add value. –Ayelet Noff, Sliced Brand
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Make sure there are no surprises.
Minimize risk and maximize value. Investors need to know that their money is safer with you than with another person of seemingly “equal” value; The only way to assure them of that is to make sure there are no surprises, no secrets, no embarrassments, or hidden vulnerabilities. Keep them informed, actually build what you say you will build, and update them early and often if circumstances change. –Budd White, Tacen
Develop application-specific solutions
While it can be challenging to raise capital while the economy is struggling, companies can insulate themselves from general market trends by developing application-specific solutions that play an integral role in customers’ businesses, rather than producing quality products. general purpose which are often the first quote. line elements in the pit. –Yaoqi Jia, AltLayer
Demonstrate solid fundamentals and highlight the advantages of Web3
Cryptocurrency companies can be more successful in raising funds if they demonstrate strong fundamentals like traction and efficiency. Additionally, cryptocurrency businesses can differentiate themselves by highlighting the unique features and potential of the Web3 ecosystem, such as its decentralized nature, transparency, and most importantly, lower cost of customer acquisition. – Erki Koldits, OÜ PopSpot
Be clear about potential risks and rewards and have a plan for using the funds
To attract investors in a tough market, focus on developing a strong business plan and track record, networking and building relationships, and staying up-to-date on industry trends. It’s also important to be transparent and clear about the risks and potential rewards of investing in the business, and to have a clear plan for how the funds will be used to grow the business. – Wolfgang Rückerl, ENT Technologies AG
don’t give in to fear
The worst thing you can do is subscribe to fear. Mindset is everything, and if your deep-seated belief is that you won’t be able to raise funds or that your business won’t survive, whether you realize it or not, you’ll make decisions—often critical decisions—in fear. its main and motivating foundation, which is not good. Instead, keep your head down and focus on what’s important. –Zain Jaffer, Zain Ventures
Potential investors are interested in projects they believe in, so it’s critical that companies continue to create great products and better services. The market will eventually turn the tide, and the companies that stayed patient and continued to work on creating impactful products are the companies that will survive for the long haul. –Anthony Georgiades, Red Pastel
This article was published via the Cointelegraph Innovation Circle, a vetted organization of top executives and industry experts in blockchain technology who are building the future through the power of connections, collaboration, and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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