Disclaimer: This article on how to get the top crypto funds to contribute to your ICO has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, financial, legal or accounting advice.
Institutional money has begun to pour into the crypto and blockchain industry as signs of maturity emerge and regulators start to clarify their positions. With the entrance of institutional funds, projects now have the opportunity to attract sizeable contributions that could take their idea from small development to global enterprise.
As the founder of a blockchain startup, you may be wondering how you can get a slice of the action. The million dollar question (literally) is how does your project stand out from the pack and get the top crypto funds to contribute to your ICO?
In a typical day, an established crypto fund may be exposed to 100 pitches or even more. Funds are getting bombarded with new projects and their forthcoming ICOs.
All this noise is making it increasingly difficult to differentiate between respectable projects and money-grabbing ones. It is therefore essential to take a methodical approach when carrying out your token purchaser outreach. The more well-prepared and authentic you are, the greater the chance of leaving a lasting impression and securing a contribution.
With this in mind, here are three basic rules of the road to get the top crypto funds to contribute to your project.
1. Determine how much you’re raising
Whenever crypto hedge funds hear entrepreneurs say they are “trying to raise money,” “flexible on soft/hard cap,” or “raising as much as we can,” it is is not only a turnoff but also a sign that an entrepreneur is not serious about the fundraising process. Before you hit the road, figure out how much money you’re going to raise.
While you can create complex financial models to calculate a specific amount of capital down to the penny for the business to become cash flow positive, almost certainly those models will be wrong. This is especially true if you’re still at the idea/whitepaper stage and don’t have an established business yet. Instead, focus on a length of time you want to fund your company to get to the next milestone.
2. KYP – Know Your Purchaser
It’s important to understand that blockchain and crypto funds are not a homogeneous group. What might impress one fund might turn off another. Make sure you know who you’re dealing with, what their approach is, and what kind of material they need to decide whether to purchase your tokens or not.
Thoroughly research the prospective token purchasers you are going to meet. Here are some questions you’ll have to consider before reaching out to crypto fund token purchasers:
The persona of a hedge fund manager is vastly different from a family office manager and a crypto fund manager. If you don’t have some sense of their points of view, your likelihood of making your pitch a success will be minimal.
3. Prepare effective funding material
Whatever you send to token purchasers must be clear, concise, compelling, and easy for them to process. You do not want a token purchaser to have to think at all, which means you need to answer every potential question at the right time, just before the token purchaser would think to ask. Do not make the common mistake of thinking that you’ll send token purchasers a teaser and then get to talk through the details at a meeting. Realise that whatever you send is often both your first and last impression, so make it count. Here’s a checklist of items you will need to have ready when you approach a potential purchaser.
Short Description of Your Business (Elevator Pitch)
You’ll need a few paragraphs that describe your product, your team, your business, and your unique selling point (USP). You don’t need to include things like the technical details of the protocol and token economics just yet. A compelling product or business idea is enough to attract the attention of an experienced crypto token purchaser.
Token Deck with Token Economics and Business Model
There are a few key things most token purchasers look at to understand and get excited about a deal: the problem you’re solving, the size of the opportunity, the strength of the team, the level of competition, competitive advantage that you have, your plan of attack, and current status. Summary financials, use of proceeds, and milestones to show that you have aggressive but sensible expectations about how your business will perform over time are also important. Most good presentations can be done in 10 slides or fewer.
White paper (position paper and yellow paper are a plus)
Position paper: some projects release one before the technical white paper. It is a clear 2– 3-page argument supported by your technology proposal that helps get community feedback to develop the technical white paper later on.
Yellow paper: The more sophisticated crypto/blockchain companies will offer a Yellow paper or a second “technical” white paper. This one presents in scientific detail the technology and the innovations that they have created, or propose to create.
Work hard on the white paper – the more substance you can pack into this document, the more a token purchaser will believe that you have thought critically about your business. It’s also a direct indication of your communication skills. A poorly written summary that leaves out key pieces of information will cause the token purchaser to assume that you haven’t thought deeply about some important issues or that you are trying to hide negative elements about the business.
Finding the right crypto fund
Once you’ve determined how much you want to raise, analysed token purchaser’ personas and prepared the material above, you can now start reaching out to your target token purchasers.
A typical institutional token purchaser (crypto and non-crypto) gets thousands of inquiries a year. Some will fund only entrepreneurs with whom they have a prior connection. Others prefer to get introduced to entrepreneurs. Some token purchasers involve only with seasoned entrepreneurs and avoid working with first-time entrepreneurs, whereas others will fund entrepreneurs of all ages and experience levels and will try to be responsive to anyone who contacts them.
Improve your chances of having token purchasers respond to you by researching them, getting a referral to them, and engaging with them at events and conferences.
Getting the top crypto funds is about more than just the money
Smart crypto entrepreneurs understand that getting institutional support is about more than just the money. Ideally, you would find a token purchaser who can proactively add value (“smart money”).
How do you know if a token purchaser will add value? Pay attention to whether they are constructive during the process. Do they understand your market? Are their questions the same questions that keep you up at night? Are you learning from their feedback? Are they passionate about the problem you’re trying to solve?
Do your due diligence on the token purchaser and find out who will be most helpful to your success, has a temperament and style that will be compatible with yours, and will ultimately be your best long-term partner.
Are you launching an ICO? Check out this ICO Checklist that details how to set up a successful Initial Coin Offering from idea to funding.
This post on understanding token sale models will also come in handy.
If you have any questions or would like to connect you can find me on Twitter or email me at [email protected] I’m always interested in meeting people working, learning, or involved with the blockchain space.
Anthony is the head of content and research at Intrepid Ventures. He has spent the past several years researching and analyzing technologies and working with a diverse mix of blockchain companies to help them gain insight and develop authoritative content.
Also published on Medium.