How early blockchain startups can beat cautious investors

Raising capital for a blockchain startup is not as easy as it used to be. All I needed in 2017 was catchy ideas, white papers and decent talknomics.

But today, after a wave of code crashed, regulatory uncertainty, and a lot of famous scams, investors were on the alert, and many people were completely recoiled from the Web3 space. As a blockchain entrepreneur, it asks people to bet on technology that not only sells products and services, but also makes many traditional investors nervous.

But the good news is that despite constant skepticism, there is still a lot of capital flowing in the blockchain space. You need the right approach to stand out from the crowd and to facilitate investor concerns.

Build a product that actually solves real problems

This may sound like an obvious point, but that’s a key point. Given all the sky hype, investors are tired of hearing about innovative technologies that lack a clear use case.

Ask yourself: “Does my product solve real problems that more traditional (Web2) technology can’t address?” If blockchain is not essential to a solution, careful investors will quickly check it out.

Your pitch should start with the problem (and the plan you will solve it) rather than the technology that underpins it. Also, use a simple language when explaining why blockchain is essential for your projects. Saying “ensure data integrity using distributed ledgers” is much more useful for investors than throwing buzzwords like “Web3 paradigm shift.”

Shows traction with real users

There’s nothing more inducing confidence than using your product to show real people. Early adoption (even if it’s modest) shows investors that they are building and using what people actually need/want. This means making your project tangible and worthy beyond being a simple vision.

While this may not be feasible for all businesses, you can consider launching a simplified version of the product so that you can collect user feedback and usage data. Even building a small but growing user base can dramatically change how investors view blockchain startups.

When it’s time to actually plead with investors, go ahead and share your specific user stories and testimonials. When potential investors hear how your blockchain solution can help you solve specific problems for real customers, they can better visualize the potential impact of your technology.

Featured in major publications to increase reliability

Media coverage can completely change how investors (and users) perceive your startup. If we can find ways to be featured in respected blockchains and business publications, this indicates that a knowledgeable third party has reviewed the project. This Crypto public relations strategy offers many credibility and reliability that will make it nearly impossible to generate through its own marketing channels.

Luckily, you don’t have to spend months building relationships with journalists (though that certainly won’t hurt). Blockchain Newswire can be used to automate much of the distribution process to make presentations in front of relevant media outlets without traditional blockchain care.

If you’re unsure what’s newsworthy, try to focus on getting the most exposure of your announcements about key partnerships, innovative features, new executive recruitment, or impressive milestones. Don’t fall into the trap of announcing minor updates. Here, quality coverage is more important than quantity.

Build a team that is more than just technical expertise

Blockchain development skills are essential when looking for talent-equipped talent, but investors will want to see you have a well-balanced team around you. They are looking for people who understand the fundamentals of the business, market dynamics, and have deep insight into the needs of their customers, not just coding skills and encryption.

Blockchain space is well known for living in its own ecosystem with its own culture and “rules.” However, if you want to give your investors the utmost trust, you need to build a team that can operate in both worlds, traditional business worlds, and Web3 spaces. The team must include the following members:

Business Development Experience Marketing Skills Industry-specific knowledge in the Target Market Pre-Startup Experience (especially important)

After all, be honest about the team gap. But there are plans to fill them up. Investors prefer founders who recognize their limits rather than people pretending to know everything.

Tackling regulatory concerns head on

Regulation uncertainty remains one of the biggest concerns in the blockchain space, and as a result, it is one of the major issues investors face. Instead of making these issues shine, try dealing with them directly on the pitch.

Learn about the world of regulations both inside and outside the country. You need to deepen your target market and develop a clear compliance strategy. Do not work in gray areas. Consider consulting with a legal expert specializing in blockchain, make sure your approach is sound and you are not revealing yourself from a compliance standpoint.

Investors want to know that you are taking these challenges seriously and have plans to operate within an existing framework. They also need to show that they are ready to adapt as regulations evolve.

The final words

Beating a careful investor isn’t just about having the latest or most innovative technology. It’s not even about having a smooth pitch deck. It is to prove that we understand and respect the unique challenge of building a viable business in the blockchain space.

The most successful founders are those who sympathize with investor concerns and approach fundraising. They recognize the industry’s problematic history and do what they can to address potential objections before they arise.

Most importantly, don’t forget that investor skepticism is not personal. It is a rational response to market maturity. You can’t win every fight, so try focusing on the substance beyond the hype. And you will attract the kind of investors who can really help you build something meaningful that will last beyond the next market cycle.