You’ve done it. You’ve thought of a brilliant idea that will change the world, or at least your standard of living so long as you can find someone who believes in your vision as much as you do. Now all you need is to find a believer who will give you a bundle of cash to make your vision a reality.
When you’re starting a business, there is plenty of sweat equity that goes into your idea. You’ve built a demo. You’ve prepared your business plans and pitch materials, all in hoping to entice the venture capitalists to believe in your idea as much as you do.
We’re often quick to take the first venture capital offer that comes our way, but it’s important to remember that not all investment dollars are the same. Some come with extra burdens, while others, in the perfect world, come with added advantages that will give your bitcoin startup a boost.
This week we’ll look at some tips on finding the “right” investors for your Bitcoin startup; these are the investors who are the difference that make a difference for your fledgling company.
Take stock of your business
Like in any successful relationship, you have to know who you are before you can find the best partner. Take stock of everything you have to offer, and, here’s the tough part, you’ll need to be 100% honest with yourself and understand where your business is lacking.
Are you providing them with an opportunity to be part of a best-in-class product? Or is yours a quick opportunity to fill a void in the current marketplace. You’ll want to consider what benefits you’re offering the investors on a short-term basis as well as long term.
Do you lack legal expertise in patent law or marketing experience to ensure your product reaches the most about of qualified users? Perhaps you need help when it comes to building an executive team. These are areas where some VC investors are willing to help, but before you ask, you need to take stock of your strengths and shortcomings, so you know what to ask.
How to find the right investment partner
I talked to Zach Resnick and Dave Mullen-Muhr from Unbounded Capital for some advice on what startups should look for when finding the right investment partners. They shared some of their vetting processes when considering new startups.
It helps to know your own company and what investors are going to be looking for in a project. Mullen-Muhr shares a few keys they look at: “Beyond the standard VC type questions, we especially like to get to know the entrepreneurs we are vetting personally. We typically move from email exchanges to phone/video calls or in-person meetings quickly to facilitate this process. The Unbounded Capital team has pretty diverse professional backgrounds and personal interests, and these mostly inform our POV and our ability to make sense of this space.
“Accordingly, we like to better understand the entrepreneur’s backgrounds in this vein as well. Regardless of whether we invest in this current round or not at all, we want to have good and mutually beneficial relationships with every entrepreneur developing Bitcoin.
“Some of our best ongoing professional relationships with Bitcoin entrepreneurs don’t involve any talk of investment but have instead developed around our shared understanding of our deeper interests and motivations. If you are building in the Bitcoin space, please reach out and let’s connect!”
Finding the right investors is often a case of not knowing what you don’t know. Resnick offers this advice, “Before raising capital, startup founders should have a clear idea of what the money will be used. Not necessarily a line-up budget, especially at the early stage, but on which hypothesis they want to test and what general areas of the business in which they wish to invest.
“Based on the sector, hypothesis to test, and areas that need the most capital investment, that helps determine which investors are right for them. Like finding customers, at first, it’s best to be very specific with envisioning your ideal customer and focus on them rather than casting a wide net and wasting a lot of time and money.”
While you’re selling your ideas to investors, you want to remember you want to do your due diligence as well. It’s ok to walk away from a deal if it’s not the right fit.
Understand the market first
What are some of the areas startups need to consider? Resnick shares, “Reference checks with portfolio company CEOs—you want to make sure they’re working well and providing value to their existing portfolio of companies.
“Try to gauge their understanding of and their network of contacts they have in the industry in which you’re building. Both are very important.”
There are times when, for a startup looking for investment, the adage “beggars can’t be choosers” rings true. Your startup needs an influx of cash, and you’re willing to take it from anyone.
If you feel like you’re desperate to take any deal, even a bad deal, Resnick would rather you put in more work. “If you’re finding yourself more in the begging stage versus choosing, likely the time raising (capital) might be better spent on improving the product. Take the time to better understanding the market or finding other sources of income to invest in your business during the early stages.”
Mullen-Muhr shares what makes Unbounded Capital uniquely qualified for Bitcoin startups, “The Unbounded Capital team has a knack for (and enjoys) discovering and advocating for unpopular truths. It should be true of every good investor. Still, virtually every fund in the cryptocurrency ecosystem appears to have either given up or failed on this when it comes to BSV.
“Having discovered the potential of Bitcoin SV, we realize we are not finished with our truth-finding. We are focused on continuing this search in our Bitcoin venture capital. It will mean, at times, disagreeing with entrepreneurs and doing the difficult work of helping them pivot away from their initial vision and towards their true potential. While challenging, this is essential for the success of the individual ventures and of the ecosystem.”
Interested in making your pitch? Learn from the people, like Rogelio Reyna of Binde, who pitched their projects to a panel of investors in Seoul for the first ever Bitcoin Association Pitch Day. Watch all Pitch Day videos on The BSV Pitch YouTube playlist.
Watch this space for more information concerning the next Pitch Day as part of CoinGeek Conference London this February or if you feel your business is ready for investment, feel free to send your business plan and pitch deck to Ventures@AyreMedia.com.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.