Let’s face it. Raising money for a crypto startup has changed. During the the past several years, the crypto market has evolved and having a fancy website and white paper filled with grandiose statements won’t do the job anymore.
Just take a look at ICOs as an example. Recently, ICOBench published a report stating that in the first quarter of 2019, only 107 ICOs managed to raise funds, which is half as many as in Q4 of 2018 (207).
So the question is: what is the best way to fundraise money for your crypto project? Let’s take a look at some options you have:
Crypto fundraising through private funding
Raising money privately with the help of angel investors, VCs, and private equity companies has its advantages. One of them is boosting public trust.
For example, Sia, a decentralized peer-to-peer cloud storage platform, chose not to hold an ICO. But with prominent investors such as Fenbushi Capital, Raptor Group, Procyon Ventures, along with angel investors like Xiaolai Li, Sia raised over $1.25 million in funding even without an ICO.
Initial Coin Offerings: are they dead?
The ICOs are dead, right? Or at least, that’s what everyone is saying. Yes, the fact is that ICOs didn’t have a good start in 2019, but that doesn’t mean that you should underestimate them.
So, how do crypto startups raise capital with ICOs? Through ICOs, investors have to buy a specific amount of tokens which will give them access to the platform. For instance, Chelle Coin that held an ICO for an “investment platform backed by performing North American True Estate,” raised $80.2 million.
Security Token Offerings: are they the next big thing?
STOs are presented as a regulatory-friendly fundraising method. A security token is a cryptocurrency that is backed by real assets and follows the SEC’s compliance regulations. We can say that compared to ICOs, STOs are lower-risk investments.
Blockchain Capital launched the first STO, back on April 10, 2017, and it managed to raise $10 million in one day.
Initial Exchange Offering – higher degree of trust for investors
IEO is a crypto fundraising method that is administered by an exchange. Today, numerous crypto exchanges have developed IEO platforms such as Binance (Binance Launchpad), Huobi (Huobi Prime), KuCoin (KuCoin Spotlight), etc. Also, the crypto exchange Bitfinex announced recently that it will conduct a $1 billion Initial Exchange Offering.
The first ever IEO goes to Tron’s BitTorrent. The sale was organized in two sessions through Binance Launchpad, and it took only fifteen minutes to reach its hard cap of $7.2 million.
Crypto fundraising in steps
How much money do you need to raise now? Is it $30 million? Then raise that money now, and after you reach the promised milestones, raise more. Try out different crypto fundraising methods until you see what works the best for you. Once you find it, stick to it.
Wrap-up
As you can see, there are different ways to raise funds for your startup. The crypto market is ever evolving and you have enough options to organize crypto fundraising. Research in-depth the above-mentioned methods, and pick the one that suits the best to your startup.
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