Venture Capital (VC) funding for crypto projects and blockchain startups follows a similar path to that of other technology startups, with some particularities due to the nature of the sector.
In addition to traditional VC funding, many crypto startups use ICO (Initial Coin Offerings) or private/public sales or other forms of token sales to raise funds. These methods allow you to raise capital directly from the community, bypassing traditional investors. Regarding the various funding rounds, startups must navigate a complex regulatory framework that varies from country to country, influencing how they raise and use funds.
Below is an overview of the various stages of funding:
⚠️Pre-Seed
Objective: develop the initial idea and build an MVP (Minimum Viable Product).
Investors: friends, family, angel investors (investors/entrepreneurs using personal funds) and small VC funds.
Amounts: generally small, up to a few thousand dollars.
Use of funds: Market research, initial product development, idea testing and validation.
⚠️Seed
Objective: validate the product on the market, acquire first users and further develop the product.
Investors: angel investors, VC funds specialized in seed funding, accelerators and incubators.
Amounts: up to a few million dollars.
Use of funds: product development, initial marketing, team expansion.
⚠️Series A
Objective: Scale the product and significantly increase users.
Investors: Larger and institutional VC funds.
Amounts: from a few million to several tens of millions of dollars.
Use of funds: team expansion, marketing, business development, strengthening technical infrastructure.
⚠️Series B
Goal: Further expand the company, enter new markets and improve operations.
Investors: large VC funds, sometimes also private equity funds.
Amounts: tens to hundreds of millions of dollars.
Use of funds: global expansion, strategic acquisitions, further product development, team expansion.
⚠️Series C and beyond
Objective: consolidate the market position, prepare for a possible IPO (Initial Public Offering).
Investors: VC funds, private equity, hedge funds and strategic investors.
Amounts: from hundreds of millions to over a billion dollars.
Use of funds: acquisitions, massive global expansion, development of new product lines, preparation for IPO.
Some startups in the DeFi sector obtain funding through decentralized liquidity mechanisms, such as liquidity mining and yield farming, by diverting liquidity to certain platforms.
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