Compilation of the original text: The Way of DeFi
Compilation of the original text: The Way of DeFi
Delphi has invested in over 100 projects and has seen thousands, possibly tens of thousands, of projects. On March 21, Delphi Digital co-founder Tom Shaughnessy shared some advice on fundraising for project founders on Twitter.
1. First of all, do not post the PPT of the project's external introduction, but should post the most simplified and feasible product (MVP) or demo.
People love being able to see and experience something, much better than just PowerPoint.
If you haven't reached the MVP or Demo step yet, but are sending your project introduction PPT to investors, I hope the following content will help.
2. Before you create a PPT, remember that the PPT should be a TLDR (Summary of Key Points).
You are dealing with a fund/DAO that has a lot of new funds on hand, needs to complete transaction tasks, and has limited time. Keep the project introduction concise, and remember to be well-thought-out for the phone conference and telegram group communication. Simplicity is the soul of wisdom.
3. Sell the story
Stories are impressive, and your audience can visualize your dreams as you take them from today to a realized future. Great teams are great storytellers, and if you can't tell a compelling story, you can't convince the masses.
4. Competitors
The team should have a clear understanding of competitors (if any) and their plans. If the founding team doesn't know that a competitor has a better strategy and is ahead of the schedule, it will be considered ignorant to start a project out of thin air.
5. About investors
Founders should have a reason for wanting a fund/DAO involved. They should have a clear understanding of what specific value the fund/DAO will bring to their project and community. Founders are also screening funds, which works both ways.
6. Saying "we're closing in 24 hours" from sales has to be the stupidest move in the world.
First, it leaves no time for either side to build the arguments or convictions needed during a bear market.
Second, the deal actually took weeks to close.
Give a more realistic timeline.
7. Remember to be very critical of your investors.
In my opinion, passive capital is likely to be NGMI because of the ease of financing. Choose a fund that focuses on some areas such as DAO, where the owner and builder have common interests.
8. One last note about investors
Never tell someone that a fund has committed or is leading a round unless they agree to participate or agree to disclose.
9. About the transaction terms
Don't be surprised by Token valuation. If you want to conduct equity valuation, please tell them the percentage of Token that the equity entity can obtain, so that the fund/DAO can return to the real FDV.
"Surprise! You're investing 2x your valuation" - no one wants to hear that near the end of an investment.
10. Token vesting (Vesting) should align everyone and be realistic so that stakeholders know that the founding team won’t crash out.
A game that takes 5 to 10 years to complete has a 12 to 18 month Vesting time - which doesn't make sense for anyone but short-term speculators.
11. About legal documents
Make sure the law firm you choose is professional and can serve the crypto market.
Ask your potential lead investor if they can help you draft the paperwork, which your outside law can then review (to make sure you as a founder are also protected!)
12. Give an example
Delphi legal advisors @lex_node and @SH_Brennan do this every day.
see detailsLexDAO's code base
13. The last one is about the terms of the transaction, know your exit method.
We are all building a community-owned world where incentives allow anyone to build a project and earn rewards.
If you mention an IPO on the phone, the fund/DAO will think you're calling from 2002. IPOs basically don't work.
14. About distribution
Be thoughtful on your token allocation table. Give some tokens to those who don't.
Don't expect funds/DAOs to do the job with $25k-$50k checks.
Make sure you get what you need from a DAO, fund, or angel investor, and that they have an actual stake.
15. Team allocation is very important
Make sure you not only have enough resources for your current team, but also develop a plan to motivate the killer talent needed for the next phase.
Lot ratios can shrink as the project grows in dollars, but plan for it.
16. Technology stack
Other than "they can give us money" and "the excitement is real", the team should have a good reason why they want to build on a certain L1 or L2.
The money comes quickly, but the excitement is short-lived. If you're not sure then investigate, that's fine, but be honest.
17. A key point is that stakeholders want to know what you did last week and last quarter.
The crypto space is moving so fast, investors can't wait until a funding round closes to start building.
What technical work you have completed, tell investors where your efforts are.
18. About Token Economics
In the pre-seed/seed round stage, the complete token economics does not have to be fully done.
The key is product, GTM (go-to-market strategy), value proposition, community and team.
As long as the team does not give up all tokens prematurely, there is an optimal choice.
19. Recommendation 1
Don't ignore DAO/fund analysts or partners.
In NextGen, these people are experts in certain fields, and their opinions are respected internally.
20. Recommendation 2
Always be professional. The crypto industry is small, and you'll probably work together later on.
I once heard a founder scoff at us for dropping a round, and I'll probably never back them in the future.
21. Recommendation 3
Keep your project presentation PPT to 10-15 slides.
You can't sell to the world if you can't convince sophisticated investors in a shorthand way.
Point interested parties to other more in-depth materials such as white papers, podcasts to see what's going on after the call.
22. Recommendation 4
A team should have a clear strategy for building, growing and motivating a community.
This isn't just a podcast or a Medium article.
This is a clear strategy based on public and stakeholder interest.
23. Recommendation 5
Nobody wants to hear 30 minutes of pitch on a 30 minute call.
You can tell people the meaning of life and they might cut off the phone after 10 minutes.
Give a 5-10 minute presentation and get everyone involved. Answer questions.
Be alive, be passionate. If not, why are you doing it?
24. Recommendation 6
Let your audience learn more in their own time and in their own way of learning.
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