The venture capitalist (VC) industry made a stunning $612 billion investment in 2021, doubling the 2020 record. Businesses requiring external funding know these investors, their influence, and their monetary power. However, where does that leave tech and non-tech enthusiasts who need financing for their cryptocurrency projects?
Silicon Valley is popular for VCs and other tech billionaires ready to invest in the next big thing. That does not mean getting on the next flight to California.
Most of your success will reflect how much you market the project to investors and end users. We hope to see you succeed in your endeavors, especially those that will revolutionize and improve life. Hence, this brief guide will show different ways to raise funds for your next crypto business.
Six Ways to Raise Funds for Your Crypto Project
Contrary to what people think, you don’t need a disruptive solution to garner the interest of billionaire or millionaire investors. What you need is something that solves a pending problem in society.
In 2022, we saw the launch of several utility coins in the crypto industry. Over 50 coins failed the same year, with more than 50% abandoned.
You need money to break this stereotype and run a successful project. With that in mind, here are six ways to raise finances for a crypto project:
This is a popular word in the business space, especially in technology. Bootstrapping involves running a business with personal finances or generating revenue. Also, it is often the first method founders use in the initial stages of their companies.
You can bootstrap anything, including gaming platforms, provided you have the funds for it. Now-successful bootstrapped crypto game projects include Tamadoge and Calvaria, however, the bootstrapping route also works if you follow mainstream options like crypto-friendly platforms for live dealer blackjack in the booming gaming sector. With popular card games, gambling platforms provide excellent experience to their users, which translates into their success – hence, serving as an ideal option for bootstrapping. Alternatively, you can follow the line of NFTs, which are also a reliable option for innovative startups.
The challenge with this method comes when you have no personal funds to get the ball rolling. You can’t reach the point where the revenue is enough to fund operations. Still, it is the easiest for a new company.
Angel investors (high-net-worth individuals) are your best bet if your startup is in the early stages. VCs often want to see some traction before backing any project. On the other hand, angel investors don’t mind taking on the risk, provided your idea is worth exploring.
The method for getting an angel investor is to approach them. That could be during high-profile events, charities, etc. However, you must do your best to convince them to invest.
Don’t expect a formal setting where you’ll speak to a group of people while demonstrating your product or service. The opportunity can come from anywhere.
VCs are companies that fund startups. You’ll lose some equity to them, but you’ll get the funds. Also, your project must have high growth potential to capture their attention.
If you do nail a VC, here are some benefits:
- Access to the VCs network, including companies and partners
- Assistance during further fundraising rounds
- Guidance to grow your project
You can raise funds even on your social media channels. Crowdfunding involves getting small amounts from many people, often in the hundreds and thousands. Investors can invest as little as $10 in your project.
GoFundMe and Kickstarter are popular crowdfunding platforms you can use for your next crypto project. However, restrictions often apply to how much investors can put into the business.
Initial Coin Offerings
An Initial Coin Offering (ICO) can raise funds if your project involves tokens or coins. This approach consists of selling coins to investors with the promise of returns at a later date. It could be from owning a stake or the utility value of the coin.
With an ICO, you expect the coin’s value to rise over time. Hence, investors or early buyers purchase them in large quantities, giving you money to fund your project further.
It takes a lot of convincing to get buyers into an ICO. That is because of the scams and fraudulent projects that litter the cryptocurrency industry.
Initial Exchange Offerings
Initial exchange offerings (IEOs) involve launching your project (often a token) on a reputable crypto exchange. That gives an immediate sense of reliability and the belief that you’ve been vetted for scams.
Binance Launchpad is a popular platform for IEOs. The company vets new tokens, and users can purchase them directly on the platform. You can use this approach to raise funds from the highly liquid market on these exchanges.
Projects that make it to IEOs must have traction and popularity. It is left for you to generate enough publicity for users to purchase your tokens.
ICOs and IEOs are best if your project involves coins or tokens. You can try other approaches like angel investors, venture capitalists, or crowdfunding platforms if it doesn’t.
Often, founders can take several routes and have a series of fundraising events throughout their companies’ life cycles until they become profitable. You don’t have to limit yourself to one approach when funding your cryptocurrency project.