Web3 Fundraising in India: The Graviton Playbook for Early-Stage Startups
India has been at the forefront of technological innovation for many decades now, with its blockchain startup ecosystem really blowing up in recent times. However, in the world of web3, there’s still a lot of guesswork and improvised pitching (as opposed to a more structured format of fundraising that the web2 populace has adopted over the years).
With more and more investors looking to invest in early-stage Web3 startups, Indian founders need to be aware of the nuances of fundraising in this space. We at Graviton have been committed to help Indian web3 founders gain access to the institutional capital that they need in order to succeed at early stages. Based on interactions with nearly a thousand founders and hundreds of venture capitalists, advisers and market makers, this is what we have learnt.
Crafting that ‘perfect’ pitch
The first step to raising funds for a Web3 startup is to craft a compelling pitch that catches the attention of potential investors. Crafting that “perfect” pitch is essential to catching the attention of investors, especially in the first few minutes. A pitch should be clear and concise while outlining both your vision and goals. But, make sure your pitch also tells a great story that captures the imagination of investors and leaves a lasting impression.
In the initial introductions, it's important to avoid technical jargon because the investors you might be pitching might not have a deep technical background. Be personable and friendly as well, because at the end of the day, investors want to back founders they think they’d enjoy working with.
Time is also very precious, so make sure you get to the point quickly and efficiently when talking to investors. Clearly outline what you're looking for and how much you're looking to raise. Don't forget to showcase your team and discuss their relevant past experiences. Remember, investors are primarily backing founders at this stage more than product.
Showcasing a clear use-of-funds is also critical to capturing the trust of a potential investor. Be sure to demonstrate the clear purpose for the amount being raised and keep it appropriate for the stage of the company. Clearly outline what you plan to do with the funds that you raise, and communicate why your company can command the valuation that you're raising at.
Sourcing the perfect investor
Now that you've got your pitch down pat, it's time to find the perfect investor to take your startup to the next level. Here are a few tips to help you on your journey:
First, create a hit list of potential VC’s and Angel investors and take a deep dive into their portfolio. Get a feel for their investment style and figure out whether or not they're a good fit for your business.
Next, work every angle of your network. Warm introductions are worth their weight in gold, so don't be shy about reaching out to old friends or colleagues that could help put you in touch with the right people.
If you can't get a warm intro, don't fret. Build up a personal connection on social media, especially Twitter, where investors tend to hang out. Comment on threads, share relevant insights, and become a familiar face in their feed.
Remember, not all money is good money. It's important to do your due diligence and make sure that your investor can add value beyond just capital. A good culture fit is also crucial, so don't be afraid to pass on an investor who doesn't align with your vision and values.
By following these pointers, you'll be well on your way to finding the perfect investor to help take your startup to new heights.
Chasing Investors and Follow-ups:
Now that you've done the hard work of identifying potential investors, it’s time to start chasing them down. Here are a few tips to make sure your follow-up game is strong:
First things first, don't let those leads go cold! Follow up regularly to stay top of mind. But don't be that person who sends an email every day, it's important to find the right balance.
Time is money, so don't chase investors who are dragging their feet. Focus on those who are showing genuine interest in your startup. They'll be the ones who are more likely to invest and help your business grow.
Transparency is key, so don't lie about timing or round composition. Be upfront and honest about the timeline and the composition of the round. It will save you a lot of headaches in the long run.
Last but not least, use a CRM to track your outreach to investors. It doesn't have to be fancy and can be a simple Google sheet. This will help you stay organized and ensure that you're not missing any leads.
Remember, raising money is not just about finding an investor who will write a check, it's about building relationships and finding the right partner who can help take your business to the next level. So, be persistent, but also be patient and find the investors who are the best fit for your startup.
Planning for the “Post-Fundraise” Phase
After successfully raising funds for your web3 startup, it is crucial to focus on the post-fundraise phase. This is the time to put in place strategies that will help your business thrive and ensure the continued support of your investors.
Sourcing Follow-On Investors:
When raising funds for your web3 startup, you’ll want to look beyond just the current round. It is essential to focus on finding investors who are willing to follow-on in later rounds. This can help to save you time in the future and keep the process of raising funds as streamlined as possible.
Sending Out Investor Updates:
Another critical aspect of the post-fundraise process is sending out investor updates on a regular basis. This is a great way to keep your investors informed about the progress of your business and also help build stronger relationships with them. Be sure to share both good and bad news and never leave your investors in the dark.
Never Leaving Your Investors in the Dark:
It is essential to maintain a strong and honest relationship with all potential investors. This includes keeping them informed about any major developments or changes in your business. Never be afraid to ask for help, and always leave yourself enough time to secure your next round, so you're not forced to do a bridge round or run out of capital.
TLDR: A Summary of the “Perfect Fundraise”
In closing, I'd like to acknowledge that raising funds for a web3 startup can be a daunting task, but it is essential to have a clear strategy in place.
- Craft a pitch that's clear, concise, and tells a great story. Leave a lasting impression that investors can relate to.
- Source the perfect investor by researching their portfolio and seeking warm introductions. Build a personal connection with them on Twitter if you have to.
- Follow up regularly, but don't waste time on leads that are not genuinely interested in your startup. Use a simple CRM to track your outreach.
- Manage expectations by being transparent about timelines and the composition of the round. Don't lie or be vague.
- Focus on the post-fundraise phase and have a clear strategy in place. Build a memorable brand and highlight your team's strengths.
- Be positive, honest, and crisp in all your interactions. Demonstrate your commitment to the roadmap, and have an honest relationship with all potential investors.
With these tips, you're well on your way to raising funds for your web3 startup and scaling it up, right next to India’s web3 unicorns. Good luck!
Bonus: A snippet from Graviton's Masterclass on early-stage fundraising:
About The Author
Alex Miningham is a General Partner at Ascensive Assets, an intensively web3-focused venture capital firm. He is also a serial entrepreneur, in possession of deep insights about early-stage fundraising.
Alex's expertise and experience in advising and investing in web3 startups through all stages of their journey, positions him perfectly to train promising young minds and help them solve practical problems for their startups.
Alex will also regularly feature as a fundraising mentor at Graviton's 16-week accelerator program, working closely with shortlisted startups in the upcoming spring cohort (Starting in March 2023)
