Raising money for your crypto/blockchain or tech startup

Hey, thanks for joining me on investream. Today I'm going to do something a little different. A viewer on Telegram asked the question, how can first time founders raise money for their ideas either using crypto channels or traditional venture? So let's start with crypto. Raising money for a crypto or blockchain idea has changed significantly in the last year. In 2017, there was a once in a generation frenzy to raise money through ICOs. A lot of scam projects got funded and so did a lot of legitimate projects. Everyone, including myself, thought once the dust settles, the way capital is raised would change forever. It partially has. But with the crash of the crypto market, combined with the more regulatory scrutiny of ICOs, the public ICO market is essentially dead. Projects have returned to the private markets to raise money from crypto VCs, crypto angels, traditional angels, and traditional VCs. Now, I'm going to give you four points that should help you get better at raising money, regardless of whether it's a crypto or traditional tech startup. Okay, so to start off, number one, do your research. I can't stress how important this is. Before reaching out to any investor, it's a good idea to research the investor and have an understanding of what the person typically funds, what their areas of interest are, what they look for in a startup, and founders, how do they help founders and how are they to work with, and of course, other things that you might think are relevant. The same thing applies for crypto or a tech startup. As an entrepreneur, you're responsible for doing your due diligence on potential partners that are going to have some involvement in your company for a long time to come. If they decide to move forward, they're likely to do some due diligence on you as well. So you might as well go ahead and do your due diligence on them first. Number two, get an introduction. Raising money is a sales process, so create a lead list of investors by researching LinkedIn, AngelList and other sources to see who you may know that knows some of these leads. Find a common trusted connection that would be able to make a personal intro. The best way to approach investors is to get an introduction from a trusted connection. Well known investors get a lot of inbound pitches. It's not personal, but really just a function of time. They need to put their time and effort on deals that have the highest probability of being funded. Deals that are referred from other founders that they've invested in before or have a relationship with are usually the best interest. The next best bet is to go to another investor that they've done deals with in the past. Of course, you'll need to get that first investor to say yes first. Now, don't ask an investor who isn't investing in your company or project to introduce you to another investor. There are exceptions to this rule. If you are a B2C company and you have a good relationship with a reputable B2B investor, you can always reach out to that B2B investor and say, hey, would you mind introducing me to this specific B2C investor? If they have a relationship with you and with that person, they may do it. Number three Engage with the investor and start building a relationship over time. Follow the lead on LinkedIn, Twitter, AngelList, or other channels where the investor welcomes public engagement. Don't go overboard and get stalkery, but engage with them on topics that interest you both. Try to be helpful where you can start building a relationship while you're also trying to get a meeting with that investor. Moving on to the final one. Number four Prepare and practice. Be prepared for the meeting. Know what kind of startups the investor has worked with and which ones have been successful. Try to learn something from the investor's experience while also sharing your vision. Look for critical feedback and don't get defensive, desperate or take a pass personally. Raising money is a marathon that requires training, practice, some luck and great timing. So to recap, number one, do your research. I can't stress how important this is and the number of founders that forget to do this or don't do this well enough is staggering. Number two, get an introduction. Find somebody who both of you know and know well and can vouch for both of you and will make the introduction. Number three, engage with the investor early on. Start building a relationship as soon as you can, but don't get too don't be a stalker. And number four, Prepare and practice. Know your numbers, know comparables. Know what your competitors are doing. Understand why this market is a fit for the investor that you're talking to, right? And be able to explain that to them. So preparing, practicing, researching, getting introductions from the right people is the best way to start now for a lot of folks. They'll come back and say I don't know anyone who knows this particular investor. That's fair. And sometimes you can reach out to investors cold and they will take a meeting. Especially if you are engaging already on some sort of social media platform. If they're engaging with you, that's a positive sign. You know there's an opportunity there for you to then parlay that into a meeting, so I hope that this was helpful. Good luck. If you've got a question, feel free to drop us an email at investstream@blockhackio or tweet me on Twitter, or feel free to leave a comment in the section below. Don't forget to hit the subscribe button so you don't miss a single episode of investream.