9 Best Practices to Successfully Raise Funds for a Web3 Project During the Bear Market (+Bonus)
A helpful guide for your early-stage company to better understand what VCs are looking for when analyzing your project
At Venture Vault we are connecting promising Web3 projects with VCs, Angel investors, and Launchpads. While doing so we have noticed several common that can help a project make a better first impression and stand out among the crowd.
The Web3 landscape, characterized by decentralized technologies and blockchain innovation, continues to captivate the interest of investors, even in bear markets. Navigating the challenges of fundraising during such times requires a strategic approach. This article provides nine essential hints for Web3 projects to secure funding from venture capitalists (VCs), angel investors, and launchpads, despite market downturns.
So here we go with hints placed in no particular order being equally important:
1. Articulate a Clear Vision
In the complex world of Web3, clarity is key. Define your project’s vision succinctly, highlighting its relevance, objectives, and potential impact. A well-articulated vision helps investors understand the project’s value proposition and long-term goals, fostering confidence in its success.
Many projects try to populate their Websites and Pitch Decks with sophisticated niche-specific terms that are hard to get straight from a fast look. I’d recommend simplifying it to a way a child can understand what you are doing at first glance.
2. Showcase an Impressive Team
Investors bet not only on ideas but also on the teams behind them. Assemble a team with a blend of technical prowess and domain expertise. Demonstrating a cohesive leadership team with a history of executing projects adds credibility to your endeavor and reassures investors of your project’s potential.
Most projects highlight only team members' names and roles in their team section. That is a big mistake as investors are usually interested in the team’s background. On a Pitch Deck, you should mention at least one short line with the most impressive experience each of your team members has i.e. “2x Founder/CEO/CTO’ or “Sold/Helped to build a 20M company” and so on. Even if it isn’t a big deal it can give a general impression on the previous performance of your team and play a decisive role when VC chooses between your project and the other one.
3. Prototype for Proof of Concept
This is a simple one. Don’t go out there fundraising without a PoC. Usually, you have only one chance with each VC, so try to make it worth their time by presenting something you have developed already. Ideally, if you have some testimonials or clients’ feedback on your beta or prototype along with measurable metrics like DAU or LTV.
A functional prototype or minimum viable product (MVP) serves as tangible evidence of your project’s feasibility. Even in bear markets, a working prototype validates your technical capabilities and demonstrates progress beyond conceptual stages. It gives investors a glimpse into your project’s potential, increasing their confidence.
4. Highlight Technological Differentiation and Innovation
The Web3 sector thrives on innovation. Emphasize the unique technological aspects that set your project apart from competitors. Whether it’s an inventive consensus algorithm, scalability solution, or user-centric design, technological differentiation increases your project’s appeal, especially when market conditions are challenging.
Web3 market is still a very new field with lots of things to invent and develop. So be as creative as possible to deliver something extraordinary, new, and needed while it is still not an oversaturated space.
5. Cultivate Community Engagement
An engaged community is a testament to the market’s interest in your project. Prioritize building an active online community through social media, forums, and developer groups. Investors perceive a vibrant community as an indicator of potential adoption and a strong foundation for growth.
From our experience, a growing and active community won’t leave investors indifferent to your project at any stage. At the end of the day, your users are to define your future success much more than your investors.
6. Strategic Partnerships with Launchpads
Collaborating with established launchpads can be a strategic move. Reputable launchpads offer exposure to a wider audience and investor network. Research and select launchpads with a history of successful projects to maximize your project’s visibility and chances of attracting investment.
You should be doing giveaways and other competitions to attract and convert launchpads’ audiences to your own. Moreover, always request VC introductions from your strategic launchpad partners as they would be eager to help with those.
7. Sustainable Tokenomics Design
A well-structured tokenomics model is integral to Web3 projects. Design tokens that align incentives and encourage long-term engagement within the ecosystem. Outline token distribution, utility, and governance mechanisms clearly, providing investors with confidence in the project’s economic sustainability.
I would recommend hiring an external specialist or a team to review and upgrade your Token Economic model. This might really save your project from the fate of token price going down below public sale in the future which is essential for long-term survival and growth.
8. Showcase Market Traction
Even during a bear market, tangible market traction is a strong selling point. Highlight partnerships, pilot programs, or early adopters that validate your project’s potential. Demonstrating that your project addresses real-world needs and has garnered interest can alleviate investor concerns.
To achieve that you need to leverage what was already described in hints number 3 and 5. Feel free to review them again.
9. Adaptability and Roadmap Clarity
In a rapidly evolving landscape, adaptability is crucial. Showcase a well-defined roadmap that outlines your project’s milestones, development phases, and anticipated challenges. Demonstrating foresight and adaptability in response to changing market dynamics can instill confidence in investors.
And a bonus one at #10! Conferences!
This is most certainly the easiest way to connect with new VCs in person. Find events that are booming with Web3 OG’s and investors, visit them, and network. Don’t forget to exchange TGs and follow up afterwards. To name a few worth going to — Consensus, Token2049, and DevConnect.
Navigating the fundraising landscape for Web3 projects during a bear market requires a strategic and multi-faceted approach. By adhering to these nine essential hints — articulating a clear vision, building a robust team, prototyping, highlighting technological differentiation, fostering community engagement, partnering with launchpads, designing sustainable tokenomics, showcasing market traction, and offering roadmap clarity — you can significantly enhance your project’s attractiveness to investors. Amid market fluctuations, a combination of innovation, community support, and adaptable planning remains the driving force for successful funding in the Web3 ecosystem.
🧬🏆 Being very well connected in the Web3 space, Venture Vault can help you out with the professional implementation of most of these hints. Feel free to reach out to us for a project review through the form available on our official website.