Fundraising 101: How to Raise Money for Your Web3 Startup

Raising money for your Web3 startup can feel like trying to navigate the blockchain without a roadmap. With so many options and steps involved, it’s easy to get overwhelmed. But don't worry—we've got you covered. This guide breaks down fundraising into simple, actionable steps tailored for Web3 founders, from creating your pitch deck, nailing your term sheet and getting the final funding/investment agreements executed.

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1. Crafting the Perfect Pitch Deck

Before you even think about approaching investors, you need a solid pitch deck. Your pitch deck is your project's story, explaining what problem you're solving, how your Web3 solution works, and why it’s a game-changer. Here’s what to include:

• Problem Statement: Clearly outline the issue your project addresses.
• Solution: Explain how your blockchain solution or decentralized platform solves this problem.
• Market Opportunity: Highlight the market size and potential, especially within the Web3 ecosystem.
• Tokenomics (if applicable): Show how your token functions within the ecosystem. Mention aspects like supply, distribution, and use cases.
• Team: Showcase your team’s expertise and experience in the Web3 space.
• Financials: Provide a snapshot of your financial projections and how you plan to use the raised funds.

A well-crafted pitch deck not only gives investors insight into your vision but also builds credibility. It shows that you’ve thought deeply about your project's direction and future, that you recognise not only the opportunities presented, but the potential challenges and pitfalls as well, and that you have a clear plan on how you are going to navigate them.

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‍2. Identifying Potential Investors

In Web3, you have more options than traditional startups, including VCs, crypto funds, DAOs, and angel investors. Research about investors who have previously funded similar Web3 projects and who align with your project's values. Find out their expectations, their investment thesis and methodology, and their typical level of involvement and oversight. Use platforms like Twitter, LinkedIn, and specialized crypto investment sites to find suitable investors.

• Traditional VCs: Experienced with fundraising, but may require more equity.
• Crypto Funds: Often focus on projects with strong tokenomics.
• DAOs: Decentralized autonomous organizations interested in decentralized solutions.
• Angel Investors: Individual backers who often provide smaller, more flexible funding.

Your goal here is to find investors who understand the Web3 space and are willing to support your project's long-term vision. It is also important that you are aligned with the investor in terms of the working and management style, as well as the level of control, oversight and involvement expected.

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3. Nailing the Pitch Meeting

Once you've identified potential investors, it's time to set up your pitch meetings. When pitching, focus on the unique aspects of your Web3 project, for example, aspects on  decentralization, token utility, go-to-market strategies, product features and community building. Be prepared to answer questions about your roadmap, tokenomics, business and monetization strategies, product features, unique selling proposition, potential pitfalls and challenges, and compliance with crypto regulations.

Pro Tip: Practice your pitch with peers in the Web3 community to get feedback and fine-tune your delivery. The more you rehearse, the more confident you'll be in front of investors.

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4. Negotiating the Term Sheet

After a successful pitch, you'll likely move on to negotiating a term sheet with interested investors. This is where things get serious, as the term sheet lays out the fundamental terms of the investment. For Web3 startups, term sheets often include details on token rights, vesting schedules, governance, and equity.

Key elements to focus on:

• Valuation: How much is your project presently worth, and how much equity or tokens will the investor receive?
• Investment Amount: Clarify how much funding the investor is providing.
• Token Rights: If tokens are part of the deal, specify distribution, vesting, and use cases.
• Control and Governance: Define voting rights, board seats, and decision-making powers.

Tip: Use GVRN’s Term Sheet Generator to streamline this process. It helps create a comprehensive term sheet tailored to your Web3 project, ensuring you don’t miss any critical terms.‍

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5. Executing Legal Documents & Managing Your Fundraising Round

Once the term sheet is signed, you’ll need to move to formal legal agreements. This is where things can get tricky. There’s often a lot of paperwork involved, especially for Web3 projects that might include both equity and token allocations. Make sure you have legal experts review all documents to avoid potential pitfalls.

• SAFEs (Simple Agreement for Future Equity): Common in early-stage Web3 fundraising. Clarify how and when they convert into equity or tokens if a Token Warrant is included along the SAFE.
• SAFT (Simple Agreement for Future Tokens): Similar to a SAFE, but instead of converting into equity, the SAFT converts into tokens.
  *Do note the additional considerations that you will have to take into account (such as virtual asset regulations and taxes) when you fundraise via SAFTs.‍
• Token Warrants: Outline token distribution terms for investors.

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After completing legal formalities, it's essential to manage the fundraising round effectively. This involves keeping track of investors, their commitments, and future vesting or token distribution schedules. GVRN’s Fundraising Tool is perfect for this, providing a dashboard to manage your cap table, store legal documents, and track each fundraising round in one place.

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Conclusion:

Raising funds for your Web3 startup doesn’t have to be overwhelming. By focusing on key steps—crafting a compelling pitch deck, finding the right investors, delivering a strong pitch, and negotiating a solid term sheet—you set the foundation for success. The right tools can further streamline this process, making it easier to manage your cap table and investor terms. Whether you’re just starting out or preparing for your next funding round, being well-prepared and clear in your approach is essential.

Ready to simplify your fundraising journey? Contact our team to see how our Fundraising Tool can help you navigate each step with ease.

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