Bitrabo Editorial
The venture capitalist (VC) industry invested an unprecedented $612 billion in 2021, doubling the previous year’s record. Businesses that require external funding are aware of the investors’ economic power and influence. However, how can enthusiasts of both technical and non-technical backgrounds secure financing for their cryptocurrency projects?
Although Silicon Valley is known for its VCs and other billionaire tech investors who are ready to invest in the next big thing, it does not mean that you need to take the next flight to California. The success of your project depends largely on how well you market it to investors and end-users. We hope to see you succeed in your endeavors, as your initiatives have the potential to revolutionize and improve people’s lives. Therefore, this brief guide will present a few different ways to fundraise for your next crypto business.
Six Ways to Raise Funds for Your Crypto Project
Contrary to what people might think, to intrigue billionaire or millionaire investors, you do not need a disruptive solution but something that solves a real-world problem.
In 2022, there were several utility coins launched in the crypto industry, but over 50 coins failed, with more than half being abandoned in that same year. But, to break this stereotype and have a successful project, you need money to operate. The following are six ways to secure financing for your cryptocurrency project:
Bootstrapping
Bootstrapping, which involves running a business with personal finances or generating revenue, is a popular term in the business world, especially in the technology sector. This method is often the first choice of founders in the initial stages of their companies, and it can be applied to anything from gaming platforms to mainstream options such as crypto-friendly platforms for online gambling. Successful examples of bootstrapped crypto game projects include Tamadoge and Calvaria, while NFTs are also seen as a reliable option for innovative startups. However, the main disadvantage of this method stems from the fact that one might not have personal funds to get started.
Angel Investment
High-net-worth individuals, known as angel investors, are the best option for startups in their early stages. VCs often want to see some traction before backing any project, while angel investors don’t mind taking on more risk if the idea is worth exploring. If you want to capitalize on this funding method, you should approach angel investors and convince them to invest in your project. Formal meetings aren’t always necessary, and opportunities can arise from anywhere.
Venture Capitalists
VCs can fund startups by providing funds in exchange for equity in the company. However, your project must have high growth potential to capture their attention. Also, to incentivize VCs to invest in your project, you need to demonstrate that it represents a new and valuable solution in the industry. If you succeed in attracting a VC, some benefits include access to the VC’s network (companies and partners), guidance to grow your project, and assistance during further fundraising rounds.
Crowdfunding
You can even raise funds for your project on your social media channels. Crowdfunding involves getting small amounts from many investors, often ranging from a few hundred to thousands of dollars. Investors can invest as little as $10 in your project. Crowdfunding platforms like GoFundMe and Kickstarter are popular and can be used to raise funds for your cryptocurrency project. However, investors’ investment capacities may be restricted.
Initial Coin Offerings
If your project involves tokens or coins, an Initial Coin Offering (ICO) is one method of raising funds. Here, you sell coins to investors with the promise of returns at a later date, usually based on owning a stake in or the utility value of the coin. The expectation is that the coin’s value will increase over time, and investors or early buyers purchase them in large quantities, providing you with additional funding for your project. However, it takes a lot of convincing to get buyers interested in an ICO, not only because there are many fraudulent projects in the crypto industry, but because investors are more cautious than before.
Initial Exchange Offerings
Launching your project, often a token, on a reputable crypto exchange is what initial exchange offerings (IEOs) entail. That gives it a sense of stability and the confidence that it has been vetted for fraud. Binance Launchpad is a popular platform for IEOs, where new tokens are evaluated, and users can directly purchase them on the platform. Users can use this approach to capitalize on the highly liquid market on these exchanges. However, projects that make it to IEOs must have traction and popularity, and publicizing your IEO is strictly left to you.
Conclusion
If you are working on a token or coin-related project, ICOs and IEOs are the best fundraising methods, but angel investors, venture capitalists, or crowdfunding platforms can be used for other types of projects. Founders can use multiple methods to fund their company’s life cycle and become profitable eventually. When making financial decisions, we recommend that you do your own research or consult a professional, and we are not responsible for any loss that may result from using the information presented on this website.