Center Tech, a company based in Miami, raised $32 million through an ICO back in 2017. It guaranteed a Visa and Mastercard-compatible cryptocurrency-based debit card. But there was no real thing. Celebrities such as Floyd Mayweather Jr. and DJ Khaled supported it.
Less than a year later, authorities apprehended the founders. They had no effective partnerships or technology. Many of these events occurred during the 2017 ICO boom. Many initiatives get funding from the white papers. A report claims that 435 initial coin offerings brought in $5.6 billion or $12.7 million each.
Strangely, more than half of these projects failed in less than four months. In 2017, more than 80% of ICOs were discovered to be scams.
It’s much harder to raise money these days. There is a lot of competition, and investors are being careful. However, good projects continue to receive funding. If you’re new to Web3, here’s how you can make money.
1. Incubators and Accelerators
These initiatives support startups using funds and mentoring to expand.
Incubators: Help startups with ideas, then guide them toward an MVP.
Accelerators can assist startups with an MVP which can help them to grow. At the end, they have a demo day to get investors interested.
Well-known Web3 programs:
- Web3 startups have 13 weeks to go through Outlier Ventures Base Camp.
- Alliance (daily direction and financial support).
- Antler (26-week program for international startups)
- Brinc (10-week fast-growing program with funds)
2. Venture Capital (VC) Funding
VCs give serious money, but they are picky. They want business models that are easy to understand, strong tokenomics, and legal compliance.
How to Choose the Right VC
VCs don’t all put money into Web3. You should go after people who support crypto, DeFi, or NFT projects. We can use Alchemy’s list of Web3 VCs to help.
You need to stress what’s special about your project in your pitch. There are many requests for investors, so you need to stand out.
Setting up VC deals
Equity and tokens are both types of funding for Web3. People who invest in your business may get tokens and shares in it.
Topics we should discuss:
- You need to invest some money. How much do you have?
What amount of equity or tokens do you want? - Lock-up periods are included in vesting schedules to prevent early sell-offs.
- Governance: Will VCs be free to decide?
Do Your Research
Investors check your legal record, financial situation, and strategy. Get ready with it:
- Legal documents (like company registration forms and contracts)
- The tokenomics model describes the distribution of tokens and their purposes
- Plan and advance (partnerships, product development, and community support).
Always know that a well-prepared startup attracts more investors.
3. Angel Investors
Angel investors are wealthy individuals who put their money into companies. Usually convinced of the objectives of the project, they are less rigid than VCs.
How to Attract Them
Conferences: Many crypto investors go to events. Web3 X Telegram and investor groups help you to meet the correct people. Angel investors invest in projects they care about, not just for money.
4. Grants and Ecosystem Funds
Some blockchain networks give money to projects that build on their networks.
Example:
Rootstock Grant ($2.5 million every three months for projects based on Bitcoin)
The Starknet Seed Grant helps early-stage teams with MVPs.
To improve your chances:
- In other words, your project should fit with the grantor’s goals.
- Have a strong road map (with clear steps and goals).
- What effect does your project have? How does it help the ecosystem?
- Apply according to the guidelines (provide all required documentation).
5. ICOs and Token Sales
Individuals still raise money using ICOs and token sales. Projects generate tokens, which investors purchase using Bitcoin (BTC) or Ethereum (ETH).
How the ICO Works
- • The white paper outlines the project, the team, and the required funding.
- Marketing campaign: gets people interested and involved.
- During the token sale event, investors buy tokens.
Legal Risks
Many countries view ICOs as securities. In the US, the SEC has strict rules. Breaking these rules could result in fines or legal trouble.
How to Succeed
Explain how tokens are used, how many there are, and what the incentives are.
- Do not set too high of goals; only raise the amount you need.
- • Be honest and keep investors up-to-date to build trust.
- People with many followers can also promote ICOs in exchange for tokens. This type of event is known as an “influencer round.
Crowdfunding
It can be difficult to get money for an MVP if you don’t have any. Talking to investors, going to events, and reaching out all cost money.
Crowdfunding on Web3 can help. Crypto doesn’t work on traditional platforms like Kickstarter. Use platforms that are based on blockchain instead, like Gitcoin Grants.
Open-source blockchain projects can get money from Gitcoin. People who believe in a project give crypto to it. It won’t bring in a lot of money, but it can help get things going.
While raising money in Web3 is more difficult than in past years, good projects still attract investment. Your project level will determine the appropriate approach, whether via VCs, angels, grants, ICOs, or crowdsourcing. You can get funds and build the future of Web3 if you work hard and plan.
