Securing funding for your Web3 project requires more than just a groundbreaking idea; it demands a strategic approach centered on product value, clear documentation, and community engagement. Speaking to Forbes, Lingling Jiang, Partner at DWF Labs, emphasised that funding opportunities aren't limited to seasoned teams with extensive portfolios. Instead, she notes: ‘What ecosystem funds are really looking for is original ideas that will help to distinguish their network from all the other L1s and L2s out there competing for market share.’
We asked Lingling to elaborate on the process of raising funds on the crypto market. Here's a step-by-step guide from her to help you succeed in attracting investors to your blockchain project.
1. Foundation Setup
Start with developing a Minimum Viable Product (MVP), a working prototype that solves a real problem using the Web3 approach. Your MVP should showcase basic functionalities on a testnet environment. Remember to maintain a clean code. You can achieve that by using an open-source repository with well-documented and commented code to demonstrate your technical skills.
Provide comprehensive documentation. In particular, include detailed architecture overviews, API specifications, and security measures in your dapp’s documentation. And always engage with the community. Actively participate in Web3 forums and social channels to build trust, share updates, and solve problems collaboratively.
2. Validation Phase
After you have a working prototype, share further progress in a transparent manner by regularly updating your community through blog posts and social media about your development milestones. You should foster early community relationships. To do that, focus on engaging with early adopters who can provide valuable feedback and become advocates for your crypto project.
To establish reliable feedback channels, set up systems to collect user insights and track metrics like daily active users and feature usage. Always avoid artificial growth tactics: focus on organic community building rather than buying followers or using incentivized engagement services.
3. Pre-Funding Readiness
When you have something to show to crypto investors, start with demonstrating a working prototype. Before approaching investors, ensure your MVP is ready and documented, while your blockchain project’s community is at least 2-3 months old. When pitching, highlight real metrics: showcase user retention rates, community growth, and other key performance indicators. Clarify your tokenomics. If you intend to incorporate a token into your dapp, clearly explain its utility and document all security considerations for token smart contracts.
4. Funding Research
Explore various funding paths tailored to Web3 projects. Here are some of them:
- Ecosystem grants, provided by blockchain platforms aiming to expand their networks through new features, tools, or apps.
- Chain-specific builder programs that usually offer long-term support, including technical resources and access to the platform's user base.
- Protocol improvement grants: these are suitable for developers enhancing existing protocols with deep technical knowledge.
- Infrastructure grants target foundational blockchain tools like data indexing, APIs, and testing frameworks.
- Community funds. Usually run by DAOs, they focus on projects that bring clear value to their community.
- Web3 hackathons that combine competitive building with networking, and where projects usually present working demos in short timeframes.
Lingling Jiang highlights the importance of hackathons: ‘Web 3 hackathons can be thought of as the precursor to grant programs. They're a great way to meet like-minded builders, get your name out there, and identify fellow developers you may be able to collaborate with. Your proposal needs to be something that can be realistically completed in a matter of days rather than months. It's an ideas factory, so the real work you do lies less in the code and more in the concept.’
5. Active Fundraising
At the active fundraising stage, you should strategize your applications: submit them in batches, and concentrate your activity around programs that align with your project's stage and goals.
Maintain regular communication. For instance, send bi-weekly updates showcasing development progress, user growth, and community achievements.
Don’t forget to invest in nurturing relationships: engage with the ecosystem by attending events and connecting with other funded teams to gain insights and visibility.
6. Managing Success
When you realise that the funding goal is about to be reached, set clear milestones. Specifically, break down your Web3 project’s roadmap into monthly goals linked to specific metrics, such as active user count, and feature launches. Commit to providing transparent updates: keep investors informed with clear reports, including key metrics and how user feedback is influencing development.
Next, scale efficiently. As funding allows, expand your team responsibly, maintaining strong documentation and clean code repositories. Always plan ahead: begin preparing for the next funding round early by analysing key metrics and incorporating feedback from your backers.
Final Thoughts
Securing funding in the Web3 space is a journey that rewards originality, preparation, and effective execution. By focusing on product value, clear documentation, and authentic community engagement, you enhance your project's appeal to investors.
We are committed to supporting innovative builders who bring transformative ideas to the blockchain ecosystem. As Lingling Jiang emphasized, original ideas that set your crypto project apart are crucial in getting investment and standing out in a competitive market.