Raising funds for blockchain startups is increasingly difficult amid lingering skepticism and post-hype doldrums. However, it’s not all doom and gloom. Bullish blockchain VC funds are still out there looking to invest in good projects. So what strategies can entrepreneurs use to make a case with their blockchain pitch deck? Attracting VCs to a project involves putting together a great team, perfecting your presentation, and committing for the long haul.
Following up on a previous post on attracting VCs to blockchain projects, I spoke to Stefan Deiss, CEO of Blockchain Propulsion, a Crypto Valley accelerator. He shared some insights into the current investment landscape and gave some tips on putting together a seamless blockchain pitch deck before pitching VCs.
What are the essential components of a good blockchain pitch deck?
To begin, get the right team, get the basics right, have some initial funding. Also, prepare to go in for the long run. It won’t be a quick project launch, it will take some time.
I think the phase of quick cash through a shoddy whitepaper is no longer the case. Many entrepreneurs are finding it hard now because they have had to go back to basics. When preparing their projects, they should also ensure that they can communicate what the exit for investors is.
Are investors going to be in for fifty years or leave in the fifth year, for example? What’s the upside if they get out early? They should have the strategy to bring the pitch to the investor while they’re building the project from scratch.
From a VC point of view, there are certainly a lot of VCs out there that want to invest in great projects. And they want to invest in
What is the role of Blockchain Propulsion in accelerating blockchain startups?
A lot of projects are knocking on our door needing funding. That’s a sign that it’s difficult to raise funds at the moment. But what we’re doing is that we’re very selective about the projects we support. 90% we don’t support. We only support 10-15 projects a year.
Of those projects we do support, we identify ourselves with those teams. We immerse ourselves in that project and become an extended part of the team rather than simply being a third-party. We have to identify ourselves with the project. We have to stand in front of an investor and say, ‘hey, here’s a great project — this is why we support this project and this is why we believe you should invest.’
We’re putting our reputation at risk as well because we’re fully backing the project. We believe as blockchain entrepreneurs and practitioners we have to have skin in the game.
We’re not simply saying to startups and project owners here’s the cost for us to deliver a specific area of expertise. We come into the project with skin in the game. We identify ourselves as part of their team.
I think another important point is that we ensure that we have the best of breed practitioners that support our projects. If they need to have the best blockchain engineers, we have them. If they need the best legal regulation and marketing experts well, we have them too.
So we provide an end-to-end service with the best of breed practitioners that enable a project to really launch to the best possible level and attract investors. Once we’ve actually gone through that whole process and accelerated the program it’s very likely that they’ll receive the funding they need because our network has backed it.
In your view, what are some projects that have found good product/market fit?
Port of Pecem [Brazil] is very interesting — It’s the one we’re currently working on. It’s an asset-backed real estate security token project and it has a great environmental and social impact element, which is absolutely critical in today’s investment environment.
There are a lot of investors that focus on an ESG element which is an environmental, social and governance criteria meaning that funds have that criteria within their funding strategy. What we try to do when we support projects is to understand whether they have an ESG component. If they don’t, we try to find one and build it into the
But the example that we’re currently working on is a smart chain city. It’s an economic city that will be able to bring a lot of people out of poverty and be able to generate income as well as improve social impact in that region.
Recently the port of Rotterdam invested as the new global frontier in the global shipping business and basically as a result of the Panama Canal expansion. It’s very much an asset-backed real estate project. It’s a smart chain city where all the transactions within that city use a token. So actually no fiat money. I would say it’s one of the leading projects that are out there today.
What did investors want to know about the project?
One very important factor is that the actual assets are there. The land has been purchased so it’s not like other real estate projects or projects that claim to be real estate-backed that have yet to purchase the assets.
In this case, the land is there so the investor has much higher assurance in their investment because it’s physically backed up by an asset. That is certainly the big difference and for an investor, it’s certainly an interesting proposition.
How should entrepreneurs prepare to pitch VCs?
We always challenge the team and ask why they need blockchain in the first place? How about using a standard database? We try to pick that apart first of all to understand the actual need as to why the client needs blockchain in the first place. The next phase is understanding whether the team is the right team.
Do they have the right talents? Most importantly do they have the time? Because there’s no point in having a great team in place and all the right talents and the guys have other things to do and simply have no time to focus on their projects.
Do they have any ESG component? We need to know because we’re pitching their projects to investors that will only invest in such ESG projects. It’s also in line with what we believe at Blockchain Propulsion. We want to work on projects that are sustainable, environmental, and have a social impact.
We do all that financial modeling for the project and then comes the critical part and that’s now how do you package that complex project in very simplistic terms. How do you put it into a one-page document?
What advice do you give on honing a blockchain pitch deck down to its simplest form?
I’ll give an example of the project we’re working on — the Port of Pecem. It’s a real estate project first and foremost, not a blockchain project.
We see today many projects bringing blockchain to the forefront and they’re diluting the underlying solution or service they’re offering. So what we’re trying to do is pitch first of all the core business. Investors are investing in a real estate project — it’s a great social impact project, but once you’ve pitched the real estate project, you then go ahead and talk about the blockchain enabler.
VCs out there eager to invest in blockchain startups want to see substantial underlying business value. A back-to-basics blockchain pitch deck will present a clear idea to investors and convince them to get onboard. Launching a blockchain project takes time and money to do right. So having a network of partners help along the way is an invaluable asset.