Before Your Blockchain Project’s TGE, You Must Raise. Here’s Why.
This is Part Eight in an 13-part Alpha Growth series breaking down the problems every blockchain project has and needs to solve to grow and scale. New to the series? Start here.
At this stage in the blockchain business development game, you have:
- Found the problem you’re solving
- Built a narrative around the solution
- Secured seed funding through investors
- Built a team
- Built a community
- Created an events strategy
Now you’re ready to launch. You’re ready for your token generation event (TGE). And with that comes your next problem:
Problem eight: you need more money
To create longevity and sustainability for your project, you need to stabilize token price in the earliest days. You need to launch with a treasury that can support your token price. This means more money. Most projects don’t do this. They think, “Hey, I can launch a coin and all these people are going to buy it because I’m so cool.”
But they’re not prepared. Their treasury can’t sustain the launch. Next stop: Zombie. This is literally why most projects go pump and then dump. Then they become irrelevant. Alpha Growth data shows this accounts for 90% of projects or more.
This is vitally important in any market, but it’s life or death in a bear market.
Why so?
- In a bear, creating liquidity in a token is harder.
- The pre-raise liquidity games at play to thicken liquidity are harder.
- When the macro is good, speculative monies can power ponzis.
- When the macro economy is hurting, less speculative monies.
The answer: economic utility — from day one.
Where does economic utility come from? In Web3, utility takes many forms.
- Tokens as gas.
- Tokens as governance.
- Tokens as in-game currency.
- Tokens as yield generators.
The most powerful kinds of utility are those generating revenue and cash flow.
Looking ahead, in the current bear we’re going to see more Web2 kinds of utility coming into Web3 as Web2 struggles and makes mistakes amid massive market fluctuations and volatility. In fact, it’s the ideal time for blockchain builders to start delivering Web2 utility with Web3 infrastructure and onboard new users.
While the current market changes the mechanics we advise Alpha Growth clients to follow in the build up to TGE launch, there some things any blockchain project needs regardless of market conditions:
- An MVP
- Business partnerships
- An engaged community
At this stage, you should have an MVP. If you’ve used your seed money wisely, you have built strong business partnerships and engaged your community effectively.
But what do “strong” and “engaged” really mean? How do you know you have strong business partnerships and an engaged community? Here’s the easiest assessment metric:
The 10–10–10 formula:
- 10K Twitter followers
- 10K Telegram members
- 10K emails addresses
Hit those numbers, and you have a strong enough community to support a token launch. They must (must) be real, not some vanity shit you bought on Fiverr, bro. You need people who are actually engaged and opted into what you are building.
But real talk. Here’s the thing about crypto. If you don’t do all of these things — at the same time — in a two-month timeframe, your community will burn out. They’ll disengage. So you have to jump in, go big, spend, spend, spend to juice your socials and go, go, go to grow before your community tires out, gets bored and goes to the next new thing.
If you take too long — longer than a couple of months — people will lose interest in your launches and your token mechanics. Yes, it’s a very, very small window of time. But we have seen the pattern for projects who launch and stabilize:
- Seed round
- MVP
- 10–10–10 formula
- Launch TGE
- 3–4 month maximum timeframe
Stretch this timeline out, especially in DeFi, and your community will dwindle. There will be another new hot thing that gets everyone’s attention.
Great projects will have a couple of things built in to counteract distraction.
- Economic utility
As discussed above, real business utility that generates revenue and opens access to cash flow is powerful.
2. Biz dev partnerships
This is like panning for gold in your community. If you’ve built a community — which you should have done by this stage — the community is helping you by evangelizing for your project. You are doing well if 10% of your community members are truly devoted and engaged. But there’s another advantage at play here. You can pan for gold in your community to find five to 10 (if you’re lucky) really great business development partnerships. You do this by telling your story — your narrative on solving the problem — until you have people who want to use your product and partner with you to grow.
When you have the community and the partners in place, it’s time to go to investors to raise more money before your TGE.
You: “Here’s what we’ve built. It’s such a pain point that we have this community rallying around it. From the community, we found 10 partners who also believe in the solution and are working with us. We’re raising a private round in advance of our TGE. Now LFG.”
Investors: “LFG.”
Sounds too easy? Here’s the thing: if you can’t raise right before TGE, you haven’t proven enough. Your MVP isn’t compelling enough to build the community and get the partners.
If that happens: go back and try again until it works.
If you’re thinking, “Nah, we’re close enough. We’ll try launching without more money right before our TGE,” here is what will happen:
You will become a zombie project because:
- You don’t have enough capital to execute
- You didn’t have the right launch mechanisms
- So you launch and become worth a hundred million dollars
- And soon you’re with $3 million
- And there’s no more juice to continue with
- Zombie
Don’t be that project. Instead build your MVP, set your community flywheel in motion, start leveraging events to amplify your growth. Then go out to investors before your TGE so you can stabilize after your launch. Speaking of that, guess what? Your launch is your next problem. In Part Nine of this series, we’ll talk more about making your launch a short-term success that segues into a long-term project. See you next week.
If you’re interested in learning about more growth strategies for your project, we encourage you to connect on Twitter @bryancolligan. Join our Telegram for members-only alpha on projects we’re watching and DYOR resources for creating growth, credibility and engagement for your project.
