🎧 How To Successfully Fundraise In Web3
Round Table Recap: Mar 22nd, 2023
In this engaging conversation, Kadeem and Ben discuss Balaji's recent $BTC bet, Ben's background in finance and crypto, and his experience with angel investing.
They delve into the founding of Bankless ventures, an early-stage Web3 venture fund, and share valuable insights on fundraising, determining the right time to raise capital, and the funding process.
Ben also shares tips on negotiating valuations, managing funding rounds, and identifying good investors. Join them as they explore the world of crypto, investments, and startups in this informative and intriguing discussion.
You can listen to the full audio here.
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• Kadeem Clarke @Crypto_Clarke
• Ben Lakoff @benlakoff
• Kadeem starts jokingly asking about the $BTC to 1mil bet that Balaji recently made on Twitter.
• Ben ponders the question but concludes it’s unlikely to happen in the 90-day time frame but will eventually occur a couple of years later.
• Ben starts explaining how he has a background in finance, working in private equity.
• Ben mentions how he got into crypto in 2016 via angel investing and, since then, has never left.
• He started companies in Web3, specifically during COVID when the bull market was taking place.
• He’s done nearly 100 angel investments and has multiple LPs in several funds.
• Most recently, he joined Bankless to launch Bankless ventures, an early-stage Web 3 venture fund.
• Bankless is a $30M early-stage fund where the founders get great deal flow because of their network down to popularity from the Bankless podcast.
• Ben explains how Bankless is unique as it is transparent about its investments and reporting within the community.
What was your first angel investment?
• Ben admits his first investments were pretty poor.
• He talks about how he started a small VC with his friends and explored the angel investing space.
• He emphasizes how the initial investments were solely learning curves but taught him how to adapt to poor projects and investments.
• Ben says the idea with Bankless is to roll the research and dd on projects into a fund instead of either one being individually done.
• He says that as a VC, there’s more thought around portfolio construction, exposure, and if a project is possibly a 100x.
As a founder, when do you know the right time to raise?
• Ben begins with the basics explaining that you look to fundraise because you’re a startup and need capital to fulfill your roadmap.
• He also acknowledges the other side explaining that you’re an investment and need to generate a return on your capital.
• He says you need an investable business with a use case that will appeal to investors.
• Ben says that just because you can fundraise doesn’t mean you should.
• He talks about how VCs are constantly looking to invest and need to look at the project and its vision, if there is a long-term proposal in mind, what are the stakeholder's expectations, etc.
🎧️ When is the Right Time to Raise Funds as a Startup 👇️
What is the process of funding?:
• Ben states that as a VC, you should keep in mind that each investor has a different mindset regarding the seed round.
• He explains that the best projects are with people you know in the industry because you can trust them.
• He says the best thing to do is create a 30-minute pitch catering to your project’s best use cases and laying out a clearcut roadmap.
🎧️ Pitching Tips: Simplify the Complex & Don't Be Afraid to Follow Up 👇️
@OxJose joins the space and asks about tips for negotiation on valuations.
• Ben says something he’s experienced is people getting a little over-optimistic with their valuations.
• He says the questions you should ask should depend on the data and explains how fundamentals back the average series A round.
• He says that talking to others in the space while also considering that every investor has different benchmarks is the right way to go.
• He also mentions researching past rounds the VC has had because this makes you more well-positioned to negotiate.
• Ben mentions how different founders will find specific metrics as traction, i.e., social presence and other external reference points.
• Ben talks about regardless of us being in a bear market, there are still substantial infrastructure tools building in Web3 and that you’ll most likely get more long-term focused investors, too, instead of yield-bearing ones.
🎧️ Raising Capital for Your Company Angel Investors, VCs and Investment Dowels 👇️
How long should funding rounds be open?
• Ben says you should aim to get organized and close deals quickly, filling up your round.
• He always says to remember that investors are drawn too quickly %, which is what you must aim for as a project.
• He says that keeping momentum and not having a draught out process needs to be a priority and that you should aim for a roughly 3-6 months timeline.
• Ben also says it’ll take more time than you may think as due diligence unravels.
• He also emphasizes how the bear market makes VCs likely to do more DD.
How to separate the evil from good investors?
• Ben says the best way is to ask for references for other investments and audits.
• He always says to acknowledge that they will sell themselves as a VC to you the same way you sell to them.
• Ben also emphasizes how you need to identify your dream team, their partnerships, and the type of investors they are (Angels, investment DAOs, etc.).
• Having that mix of WHO you want on your table.