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. To raise funds for projects, 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 to raise funds for projects. 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 before its launch? They do so for the promise of future benefits. The main selling point of ICOs is their potential to raise funds and increase token value after launch. Businesses can also integrate these tokens into their ecosystems. If executed well, ICOs attract publicity and boost a crypto project’s success.

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 fulfill 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 to raise funds for projects. 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 an IEO, where exchange staff conduct an internal review, the community votes on Initial DEX Offerings. Once your project reaches the DEX’s launchpad, community members decide whether to list it. If they approve it, you must add your token to a pool where users sign up to receive a specific amount.

Unlike ICOs and IEOs, users won’t immediately know the token’s price. Instead, demand will determine its value. After this process, the platform mints the tokens and lists them 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, an angel investor is a single individual. They don’t always seek equity in return. Sometimes, they simply believe in the project and its vision.

Beyond just the money, angel investors bring industry experience and valuable connections. However, finding an angel investor is not always easy. It’s not as simple as filling out a form to be listed on an exchange. Platforms like AngelList connect investors to entrepreneurs, as do referrals from others.

If you choose this route, target someone already interested in crypto or involved in the industry. If you secure a meeting, be prepared to present a strong business plan, a solid team, and clear steps for success.

Conclusion

Getting your crypto project off the ground will likely require fundraising. Fortunately, there are several ways to do this. Options include venture capital funding and running your own ICO. Each option takes into account your needs, resources, and desired level of involvement.

Regardless of the option you choose, conduct thorough research. Following all necessary steps will protect you legally and help you raise the funds your business needs to succeed.