Opinions expressed by businessman the collaborators are theirs.
If you’re reading this, you’ll likely agree: starting a Web3 business can seem daunting and confusing. At least, that’s how I felt when I started funding my business with Web3 solutions for early stage crowdfunding. The learning curve seemed almost out of reach. My perspective changed, however, after sitting down with my friend Metta World Peace, yes, the former Lakers legend who brought home an NBA championship in 2010. He coached me on how his fund of $1 billion venture capital Tru evaluates its portfolio investments.
“There are two types of founders,” Metta told me, those who “have the experience and the education and then there are the founders who are the visionaries who know exactly where they want to be.” The founders he wants to invest in, he says, take calculated risks. “You want to take it step by step, make sure you’re building a good product, test it before you spend too much money building the wrong technology architecture, and be careful not to lose your investment money because I’ve seen so many people lose so much money so fast.”
A calculated approach is more than necessary in today’s volatile market. Despite the recent bankruptcy filing of crypto exchange FTX, entrepreneurs are building and innovating in the industry, and why shouldn’t they? The global blockchain market is still expected to be valued at around $67 billion by 2026, according to recent research from Cornell University. Although Bitcoin is falling, the total crypto market cap is around $900 billion, and hundreds of Web3 projects have raised billions in funding. Despite the uncertain economic times, Metta still sees an opportunity in this emerging and growing market and as a result is investing in blockchain technology projects today.
However, not everyone sees it that way: venture capital investment money has fallen by half. This is why many entrepreneurs turn to alternative financing options in addition to raising venture capital.
1. Raise funds and find investors
Have you ever invested in a traditional startup or even a crypto startup? Investing in new cryptocurrency projects is very accessible. Too easy, some might say, so you have to be very careful when using these products. There are a lot of fraudulent new projects in this industry, so make sure you do your own research before you lose money trying to do this.
On the other hand, raising funds for yourself can be easier with crowdfunding tools than in a traditional financial environment. “Using crowdfunding tools is a new way founders are raising money. This is attractive to founders who don’t have connections to investors, angels or venture capitalists,” explained Metta. In Silicon Valley, for example, raising money with cold emails can be challenging and often requires a relationship with an investor to get a foot in the door. When you consider the hurdles and hurdles you have to overcome to meet with investors without a pre-existing network, in addition to the legal paperwork that goes into term sheets, it can be quite a hassle to navigate the world of venture capital . Many founders look to crowdfunding as an alternative to venture capital or as a supplement.
Metta World Peace understands the importance of crowdsourcing startups to the future of Web2 as it enters Web3. Since his unofficial retirement in 2017, Metta has shifted his focus to the business and technology industries, where he is an investor and spokesperson for several startups and small businesses.
For example, Orbiiit Technology is a company in Metta’s investment portfolio where he was an early investor. The company launched a virtual competition called “The Pitch”, which officially launched at the end of October 2022 and ends on November 28, 2022. The competition aims to find the next founder of the emerging unicorn startup. Metta participates in the competition as a starting judge.
Think Shark Tank, but online. Startups compete to win capital and in-kind prizes to help them grow their businesses without losing any capital. Metta judges the contest along with Orbiiit founder Nader Navabi. Together, they will evaluate the top 10 finalists, who will be selected through an online public voting process. The first place winner will receive $25,000 in cash and a one-on-one Zoom mentoring session with Metta and the investment committee.
However, not everyone can raise funds or compete on “The Pitch,” so that’s why saving and investing might be the way to go.
2. Save and invest
Many new entrepreneurs start after saving, investing, and then starting when their nest egg is ready to hatch. To get going, Metta says, “you want to get a revenue stream going as soon as possible.” Being strategic about your chosen job or side hustle can also put you on the right path to achieving your entrepreneurial goals.
“Let’s say you’re building a coffee company. Go work at Starbucks to learn their systems, so you can also make money with a day job. If you want to start a FinTech app, get a job at a VC, start in the mailroom. Do whatever you have to do to learn something that can affect your own business in a meaningful way,” he said. “Do this while you’re also gradually saving money to self-fund your business, because the more you bootstrap your business, the more capital you can keep and improve your business,” he continued.
To survive, says Metta, you always need extra money. Selling digital goods is a way to get passive income to fund your startup, say for example you sell the original intellectual property or you get secondary sales profits by buying at a low price. and selling high “You can also save on payroll by paying your employees in equity, tokens or even NFTs in addition to cash.” Finally, if you are sitting on digital assets, you can put your money to work by locking it in decentralized financial platforms to get returns, but remember to be very careful with the platforms you choose because this option is very risky.
3. Build connections
“Building connections helps founders raise money,” says Metta. “If you don’t have the connections, it’s going to be hard for you to get the seed capital you need. Web3 gives platforms an opportunity to decentralize the way money is raised.”
We live in a very social world. With so many opportunities out there, it can be easy to make the right connections if you stay active and do your best to learn more. The most common way founders raise money when they don’t have investor connections is by bringing in seed investors and advisors who do. For example, in an insular community like Silicon Valley, it’s less about how many people you know and more about who you know. You can still meet a few people if you meet the right people in venture capital, those relationships can go a long way. Calling in an advisor who can make revised presentations is a common way to schedule presentation meetings. Give the advisor a small equity package and they will work hard and long hours to open up their network to help secure valuable pitch meetings.
Even if the investor approves, you can always follow up to ask if they’d mind making a pitch to another investor friend of theirs who they think might be a better fit. Always research an investor’s portfolio of startups to understand the common themes, sectors and stage of investment that fit that investor’s existing portfolio and what motivates them to invest. Also, remember to keep the dollar value range within your typical check size because if it’s outside of the usual range, the chances are higher that it will pass.
It’s still early. Good ideas rise to the top. If you have innovative concepts in your head but don’t know how to integrate them into the traditional market, maybe it’s time to start as an entrepreneur. Who knows, maybe Metta World Peace will invest in your company?