One of the most important parts of any business is raising funds. This is especially true for new businesses that want to get off the ground and also applies to crypto businesses. Marketing campaigns, exchange listings, staff, and much more need to be paid for.

This means, naturally, that it is essential for new crypto projects to raise capital. But how do you do that? The good news is that there are a plethora of ways to raise money for crypto projects, both the traditional and the more modern. These include:

• Venture Capital
• ICOs
• IEOs
• Initial DEX Offerings
• Angel Investors

Venture Capital:

A quick look at tech news will show that many startups get off the ground by turning to venture capital funding. Some of the most notable companies like Uber and Robinhood got their start after getting a venture capital funding boost.

Venture capital (VC) is when a group of investors pool resources together, usually through a venture capital firm, and invest in different businesses. In exchange for these resources, the investors get a stake in the company and a share of its future profits.

Several large venture capital firms like Anderssen Horowitz and Pantera Capital have funded crypto ventures in the past so clearly, this is an option for crypto entrepreneurs. Getting venture capital funding is also good for a business because it gives a stamp of credibility. After all, billion-dollar VC firms aren’t putting in all this effort and money unless they think a business will succeed.

Getting VC funding is a bit of an intricate process. You first need to assemble your team and decide which VC firm to target (different firms have different specialities). Then, you have to build your pitch deck and begin reaching out to these firms to sell your project and if you’re lucky, you’ll get funding.

Initial Coin Offerings:

A few years ago, Initial Coin Offerings (ICOs) were the go-to way for crypto ventures to raise the funds that they needed. It is essentially the crypto equivalent of an Initial Public Offering (IPO) but has its own twist. In an IPO, you sell the shares of your company to the public to raise funds but with an ICO, you sell the native crypto associated with your project to raise funds.

But why would people buy your project’s native token when it is not yet fully launched? For the promise of benefits in the future. The main selling point of ICOs is that once the funds are raised and the project is launched, the tokens will increase in value or can be used in the ecosystem. ICOs can be very successful if done right and can also drum up a lot of publicity for any crypto business.

Launching an ICO also takes quite a bit of planning. You will need to write and release a whitepaper to the public and market the ICO to convince people to buy it. You’ll also need to set up a website and online presence through which users can buy the token once it launches. Once you mint your tokens, the public will have a chance to buy them and support the project.

Initial Exchange Offerings:

While ICOs were all the rage in the past, Initial Exchange Offerings (IEOs) have become immensely popular as well. But what’s the difference? When you launch an ICO, you manage the token distribution yourself and have to make sure that all orders are fulfilled and everything goes smoothly. When you launch an IEO, the tokens are sold through a third-party crypto exchange like Coinbase and Binance.

This doesn’t exactly come cheap for the business owner. You will have to pay a fee to the exchange to list your token and fulfil orders for you and in many cases, the exchange will also take a cut of the sales. But there is a reason why many business owners opt for this. First, it saves them time and effort of doing it themselves. Running a token sale is a lot of work and many would rather outsource. On top of this, you’re more likely to have a successful token sale if you direct buyers to a reputable site as opposed to your own which they might not trust yet.

Getting your token listed on an exchange will involve an application process and some due diligence but appears to be worth it.

Initial DEX Offerings:

In the last few years, Decentralized Exchanges (DEXs) have become extremely popular with the rise of DeFi. People can do all sorts of things on DeFi platforms, including buying into ICOs. Initial DEX Offerings are similar to IEOs, except that they take place on decentralized exchanges and not centralized ones.

But there’s a bit more to this. Unlike with an IEO where you will form and undergo an internal review by exchange staff, Initial DEX Offerings have to be voted on by the community. Once your project is on the DEX’s launchpad, community members will vote on whether or not it should be listed. If you get past this hurdle, you’ll need to put your token in a pool where users will sign up to get a certain number of tokens.

Unlike ICOs and IEOs, they won’t know off the bat how much the token will cost them. Instead, the price will eventually be determined by how much demand there is for the token. Once this is over, the tokens are minted and listed on the DEX.

Angel Investors:

Another traditional fundraising method along with venture capital funding, angel investors are wealthy people who invest in promising projects. Unlike a venture capital firm, they are a single individual, and they don’t always do so in exchange for equity. In some cases, the investor simply believes a lot in the project and sees its vision.

And beyond just the money, angel investors typically have experience in an industry and connections that an entrepreneur can find valuable. Now, keep in mind, that finding an angel investor is a somewhat tricky process and is not always as straightforward as filling out a form to be listed on an exchange. There are sites like AngelList that connect angel investors to entrepreneurs, as well as referrals from other people.

If you opt for this route, it would be a good idea to approach someone who already has an interest in crypto or has engaged with the industry. If you do land a meeting with a potential angel investor, you’ll need to show a good business plan, a solid team, and actionable steps that will make the business likely to succeed.

Conclusion

Getting your amazing crypto project off the ground will likely require some fundraising efforts on your part. There are, thankfully, several ways to do this. From venture capital funding to running your own ICO, there is always an option that will take into account your needs, resources, and the level of involvement you want to have.

Regardless of which option you choose, make sure you conduct thorough research and follow all the necessary steps. This will not only protect you and your project legally but will make sure you raise the funds that your business needs to succeed.