Starting life as a tech nerd curio, cryptocurrencies are now increasingly woven into the fabric of the contemporary startup scene. There are all sorts of ways this is happening. But here, we’re just interested in how it’s producing some interesting fundraising possibilities. So with that in mind, here is a whistle-stop tour of some of the options — whether to implement them moving forward is going to be entirely down to you.
Taking Crypto as Payment (and Promoting the Idea)
This idea is generally a consistent one if you’re planning to implement any of the other items on this list, as it makes the right signal to people who are already invested in cryptocurrencies and draw their interest, as well as people who are only interested in crypto. Major platforms now make accepting crypto possible such as Shopify, the CEO of which recently went as far as to join the board of Coinbase. Whether or not your startup is in the retail sector, the point is that it’s already fairly mainstream. Some startups simply post the public key to a wallet and the type of crypto, while others use a fancier interface.
Creating an Initial Coin Offering (ICO)
Bearing only some resemblances to an Initial Public Offering, an ICO carries more risk to investors than the parent phrase and are therefore generally a lot smaller. On the other side of the coin (pun intended), the reason for the higher risk is a positive for the startup, since it doesn’t require the legal and bureaucratic overheads of a stock market listing. Although usually essentially a type of crowdfunding where you publicly offer a certain number of your own tokens to raise capital for the project, offerings can also be made to private investors only. ICOs can also be made on exchanges (where they are called Initial Exchange Offerings, and the exchange takes a cut) such as Binance, or on decentralized exchanges (Initial Dex Offerings).
Selling Participation Tokens
Moving more left field from these more established vehicles, the idea of a participation token is that purchasers gain certain perks or access to goods or services. This idea derives from what Socios is doing in the sports world, where fan tokens for each participating team can be bought, sold, or wielded like a scalable, immutable membership allowing owners to vote in meaningful team polls, or get access to things like merch, VIP experiences, or early news. While Socios has made this central to their platform, other startups need only integrate the idea into their business plan, much like the sports teams have.
You probably knew this was coming. Selling digital assets is not a new idea, but doing it with a blockchain-backed token is again going to draw a crypto audience and are often purchased in crypto. It’s not just artwork — music, schematics, the sky’s the limit here.
Start Mining Cryptocurrency
This route is not for the faint of heart. Bitcoin mining is a serious undertaking in 2022, so you may want to pick another altcoin. Different coins will require different hardware and software configurations, and the ROI could even be negative if the coin takes a dive. While not a quick way to raise funds, some have had success by becoming validators as a component of their entry into a blockchain network.
Of course, none of these ways to raise funds should be taken as prescription or advice. All means of raising finances come with some level of risk attached, and crypto options are no different from others in needing a substantial amount of time, skill and money to implement. For a broad understanding of ways to raise funds, come and visit again and subscribe to the Fundraising Radio podcast.