As the era of the ICO fades and new blockchain technology companies projects enter the market, entrepreneurs are looking to more conventional methods to raise capital. STOs are still an option, but attracting VC investors to your business is another method. Navigating seed round funding can seem like a huge challenge, but like any business, finding investors for a blockchain technology company boils down to an open and honest plan and a confident pitch.
As I mentioned, launching a security token offering an option. As ICOs came under greater regulatory scrutiny, STOs emerged. While they do speed up fundraising compared to VC rounds, you may prefer to seek venture capital. Unfriendly regulations or legal limbo in some jurisdictions have forced some to avoid token offerings altogether.
Attracting VCs to your project may seem daunting, but with careful planning and some guidance, securing capital for your project can get your business off the ground. Here are some helpful tips we’ve found that help startups attract VCs. Accelerators such as the Swiss-based Blockchain Propulsion can help connect you to major VC Funds. But it’s crucial to get your details straight.
Blockchain technology companies’ guide to attracting VCs
1. Lay out a seamless business model
Before you start pitching VCs, lay out a seamless business model. This is true for all new startups, but it’s especially important for blockchain tech companies. Many are still skeptical of the technology.
A general lack of understanding of what blockchain can and can’t do is common. So be clear about what you plan to use the technology to do. The shadow of the ICO scams may limit investor interest. Be as transparent and trustworthy as possible.
Do some digging beforehand and be sure the VCs you’re pitching have a history of funding successful blockchain projects. It shows that they’re open to blockchain projects. This won’t waste your time – or theirs.
- Check to see if the VC has funded blockchain startups or other tech ventures of a similar size.
- Be sure the VC hasn’t invested in any of your competitors – they could be checking you out.
- Build a network of blockchain experts that can help with this research and provide valuable insight into the investment landscape. A blockchain accelerator can connect startups with VCs.
In the business plan itself, be clear about how the business will operate. A sound business model will attract the attention of venture capital. Run it by people with critical eyes. A clear idea of how the blockchain business will operate and how it will be profitable will get your feet in the door.
2. Create a robust technical plan
For blockchain tech companies, developing a sound tokenomics model and making sure smart contracts that underpin the application are secure are a few of the major aspects of the business to consider.
If you have a great business idea but aren’t as sure about the deep technical things, reach out to experts who do. Blockchain consultants can help develop a full picture of a project and even create a full pitch deck to take and show to VCs.
A blockchain accelerator can be a valuable resource as you flesh out your business plan. Most have a network of industry experts willing to help blockchain tech companies succeed.
- Reach out to a blockchain accelerator to consult with seasoned experts.
- develop a concrete technical plan focused on tokenomics, smart contract security, and great UX.
Before they invest, VCs want to be sure that a project will be successful, so knowing both the technical jargon and business value will help you answer those tough questions and make a great pitch. The more you know, the more confident you’ll be in your presentation.
3. Research your customers
Aside from drafting a solid business plan, find out who your customers are. building products that fill real people’s needs is fundamental. VCs will want to know who your users will be and why they’ll use the product. Be specific about the niche you want to target and the reasons they would use your blockchain app.
Pinpointing the people who will actually pay to use the product is an important early step. In software development, we create user stories to take a complex problem and boil it down to its essential parts. mapping out user stories helps not only you but also busy VCs see the value proposition.
Clearing up who will use the product and why will help make VCs understand product/market fit. Product/market fit is vital in order to convince VCs to fund your project. Finding a clear niche of customers who will benefit from the product you’re launching will mean the difference between getting funded, or staying on the drawing board.
- Make sure your product fits a market need and be painstakingly specific about that niche.
- How will your customers use your product?
Along with product/market fit, make sure that your blockchain product actually solves a problem and be specific about how. What may seem obvious to you and your team may not be obvious for outsiders. Don’t assume anything is a given.
Take a critical perspective or seek out outside advice. Finding this niche can seem elusive, but putting in the work to find it will clearly show the value to investors.
4. Showcase a solid team
Along with finding a niche, crafting a robust technical foundation, and coming up with a seamless business model, gather and show off the team behind the project. Engaged teams in blockchain tech companies are vital to attracting VCs to your project.
Show the experts in your team — especially ones who know are well-versed in blockchain technology, or marketing. Demonstrate a committed team of people behind a project — people who are passionate and committed to the project’s long-term success.
Demonstrating that a team will work well together is another important point. Team cohesion and a common vision will communicate stability and seriousness to potential investors. For blockchain businesses, this is even more important. Building trust in a product is one of the biggest challenges facing your niche.
- Build a driven team of people in the project who are engaged and enthusiastic about the product you’re developing.
- Highlight the team in discussions with VCs who may want to know detailed information about who works with you and what their commitment level is.
Blockchain technology companies’ guide to attracting VCs – Conclusion
Attracting VCs to blockchain technology companies takes a bit of careful planning and good communication. Building trust through a transparent, straightforward goal is how to attract investment capital to a new project. Along with the things VCs want to see in standard projects, blockchain projects take more trust. So show the people behind it.
Running all this by industry insiders is also a helpful step before you pitch VCs. consultants in a blockchain accelerator can be valuable resources. They can not only guide you through the whole process but also play devil’s advocate. The network that a blockchain accelerator provides can be a great place to start looking.
They can also help draft a full pitch deck that lays out all the major aspects of a business plan, revenue stream, technical aspects, team, and the customer niche. Since many have been through funding rounds before, they know the ins and outs of the market.
Getting a great idea off the ground with VC funding takes dedication and some advanced planning, but an innovative idea coupled with a confident pitch will help convince investors to take a chance.