Part 4: Life of a Blockchain Entrepreneur (money on my mind)

In Part 3 I left off with Stardust joining an accelerator, MouseBelt. We put our heads down and spent a good 10 months with members of their team building, streamlining our business model, and developing long-term customer acquisition strategies.

As we wound down our work with the MouseBelt accelerator, our focus shifted to fundraising. Our original idea had been completely revamped, streamlined, and we had been heads down building for the last year — ready to take the market by storm. I was 100% confident that we would have no trouble raising money, I had a large amount of “warm contacts” from Stardust’s last time raising money and I was sure that they would just jump at the opportunity to invest in a great idea ready to take over the market.

Boy was I wrong about that. Raising money is hard.

In my experience, pre-revenue companies are judged primarily on 4 criteria

1. Previous investors, including accelerators (Y Combinator / 500 Startups)
2. Founders & past experience
3. Idea, feasibility, risk, and payoff potential
4. Does anyone want to use it?

Every investor is different, some value your idea, some value your team, and some just care if you have a big name on your cap table. Having a strong indicator in each of these categories is paramount to making sure investors don’t turn away from your company and invest in the next.

The warm contacts I had from the previous round were impressed to see how far Stardust had come, but their bullishness on anything having to do with blockchain had done a 180 from late 2017 / early 2018. Stardust currently has no token and is a completely equity based business, but that alone wasn’t enough to appeal to investors scared off by the blockchain bubble crash.

If you missed steps 1–6, please read Part 1, Part 2, and Part 3!

Step Seven — Make yourself appeal to investors

1. Past Investors: Not every company is going to have a large tier investor, especially at an early stage — however, a well placed angel can be even more beneficial in attracting outside investment. For example, a $50,000 from Brian Armstrong (CEO of Coinbase) is better at attracting top tier investors in the blockchain space than than a $250,000 check from a relatively unknown investor.
2. Founders: You MUST, I repeat, MUST present yourself as an authority on the subject matter of the company you are starting. You don’t have to have worked in the industry for 10 years (although it helps if you have), but you must give an investor confidence that you know wtf you are doing and that you understand the problem at an intimate level. For example, Stardust is in the gaming space, so when I introduce myself and my background I say, “In college I was a indie game developer …” This projects that I have first hand experience in the industry and am solving a problem that I as a developer have had in the past.
3. Idea: While you might think that a 50 million dollar company is large, to a VC it is small, you need to show them that your company has a billion dollar potential. You need to show how large your market is, who your competitors are, why you are better and will succeed, how you will make money — all in a succinct manner so they can repeat it to their colleagues when evaluating the investment. No VC will be as excited about your idea as you are, your job is to convince them that they should be.
4. Does anyone care? A valid question! Who are your customers, how do you know they need this, have you talked with them? A skeptical VC isn’t going to take everything you say at face value, you should have some way to prove that your potential customers actually feel this problem every day. LOIs & MOUs are a great way to show investors that people care and want to use your project. A Letter of Intent or a Memorandum of Understanding is a non-binding contract that says “My name is customer [abc] and I am going to use your product” (there is a great template for an MOU on RocketLawyer).

Over the course of ~2 months I was able to get 10 MOUs signed. My product was still the same, but I was now able to show VCs that we had games who liked the idea of our platform and would use it if it were complete and released. A slide with logos of people who have all said they want to use your product is invaluable.

Step Eight — Creating the perfect deck

Here is the process I used

1. Create a deck in google slides — follow this template
2. Present to your advisors, parents, ect — they must have startup experience.
3. After each slide ask the audience, “What do you want to know now?” That becomes your next slide — your job is to listen to advice, not accept it all
4. Repeat steps 2 & 3 at least 3 times (you can change the question in #3, maybe ask a slide specific question, “What did you learn on this slide?”)
5. Present the deck to someone who has no idea who you are and at the end ask them to tell you in 2/3 sentences what your company does. You’d be surprised how a pitch deck that makes sense to you makes no sense to them — trust me if your audience cant explain what you do, neither will a VC analyst to his boss
6. Send it to a designer, ugly decks don’t get checks

Step Nine — get ready for a LOT of “NOs”.

I’ll be writing a lot more about the process of pitching investors and my experience in the next story. Fundraising is not an easy process and you are going to question yourself, product, and your life decisions. Very rarely does a first time founder get a yes on the first try, and you need to be ready for 5, 10, 15, 20 rejections before you get a final yes.

Here are a few things to do to make sure you can get up and dust yourself off after every rejection

• Find a good book to read. It sounds silly, but it will help occupy your mind
• Be confident in your strategy going forward and make sure you have a plan outlined, everything happens for a meeting
• Look back and understand how you can improve

While I’d love to tell you that finding an investor isn’t a spray and pray process, the sad fact is it is. You may get lucky, unlucky, your company may even go out of business with a killer idea — raising is about determination and the ability to keep going after understanding that you may never make it.

Now its my turn to stop writing and go find investment, wish me luck.

Thank you for reading part 4 of my series Life of a Blockchain Entrepreneur. If you enjoyed please consider following and giving this article 👏 50 claps 👏, both mean a lot to me as I continue this journey.

Feel free to reach out with any questions, suggestions, or if you are interested in becoming an entrepreneur yourself!

Email: clinder@stardust.cards