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If you’re reading this, then chances are you’ll agree: Starting a Web3 business feels daunting and confusing. At least, that’s how I felt when I first started funding my business with Web3 solutions for early-stage crowdfunding. The learning curve felt almost out of reach. My perspective changed, however, after sitting with my friend Metta World Peace — yes, the former Lakers legend who brought home an NBA Championship in 2010. He coached me on how his targeted $1 billion venture capital fund Tru evaluates his portfolio investments.
“There are two types of founders,” Metta told me, the ones who “have the experience and education and then there are the founders that are the visionaries who know exactly where they want to be.” The founders he’s looking to invest in, he says, take calculated risks. “You want to take it step by step, make sure you’re building a good product, test it out before you spend too much money building the wrong tech architecture, and be careful not to blow through your investment money because I’ve seen so many people lose so much money so fast.”
A calculated approach is more than necessary in today’s volatile market. Despite the recent bankruptcy filing by crypto exchange FTX, entrepreneurs are building and innovating in the sector — and why shouldn’t they? The global blockchain market is still expected to be valued at around $67 billion by 2026 according to recent Cornell University research. Even as Bitcoin falls, the total crypto market cap stands around $900 billion, and hundreds of Web3 projects have raised billions in funding. Despite the uncertain economic times, Metta still sees opportunity in this growing and emerging market and he’s investing in blockchain technology projects today as a result.
Not everyone sees it that way though — venture capital investment money has plummeted in half. That’s why many entrepreneurs are turning to alternative funding options in addition to raising venture capital.
1. Raising funds and finding investors
Have you ever invested in a traditional startup or even a crypto startup? Investing in new cryptocurrency projects is highly accessible. Too easy, some might say, so you have to be really careful when using these products. There are many fraudulent new projects in this Industry, so make sure to do your own research before losing money in the attempt to make it.
On the other hand, raising funds for yourself can be easier using crowdfunding tools versus in a traditional finance setting. “Using crowdfunding tools is a new way founders are going about raising money. That’s attractive to founders who don’t have connections to investors, angels or venture capitalists,” Metta explained. In Silicon Valley, for example, raising money from cold emails can be a challenge and often requires a relationship with an investor to get a foot in the door. When you consider the hurdles and obstacles you need to overcome to meet with investors without a preexisting network, in addition to the legal paperwork that goes into term sheets, it can be a lot of hassle to navigate the venture capital world. So many founders are looking to crowdfunding as an alternative to venture capital or in addition to it.
Metta World Peace understands how important crowd-sourcing startups are to the future of Web2 as it enters Web3. Since his unofficial retirement in 2017, Metta has shifted his focus to the entrepreneurial and tech industries, where he is an investor as well as a spokesperson for several startups and small businesses.
For example, Orbiiit Technology is a company in Metta’s investment portfolio where he was an early investor. The company launched a virtual competition called “The Pitch,” which officially launched in late October 2022 and wraps up on November 28, 2022. The competition sets out to find the next up-and-coming unicorn startup founder. Metta is participating in the competition as a startup judge.
Think Shark Tank — but online. Startups compete to win capital and in-kind prizes to help them grow their businesses without losing any equity. Metta judges the contest alongside Orbiiit founder Nader Navabi. Together, they will evaluate the top 10 final contestants, who will be selected through a public online voting process. The first-place winner will receive $25,000 cash and a one-on-one Zoom mentoring session with Metta and the investment committee.
Not everyone can raise funds, however, or compete in “The Pitch,” for that matter — which is why saving and investing could be the way to go.
2. Saving and investing
Many new entrepreneurs get their start after saving, investing and then getting started when their nest egg is ready to hatch. To get ahead, Metta says “you want to get a revenue stream as early on as possible.” Being strategic about the job or side hustle you choose can also set you off on the right path to achieving your entrepreneurial goals.
“Let’s say you’re building a coffee company. Go work at Starbucks to learn their systems, so you can also make some money through a day job. If you want to start a FinTech app, get a job at a VC, start in the mail room. Do whatever you’ve got to do to learn something that can impact your own company in a meaningful way,” he said. “Do this while you’re also gradually saving money to self-finance your business because the more you bootstrap your company the more equity you can hold on to and improve your business,” he continued.
To survive, Metta says, you always need additional money coming in. Selling digital goods is one way to earn passive income to fund your startup, let’s say, for example, you’re selling original IP or you profit on secondary sales by buying low and selling high. “You can also save on payroll by paying your employees in equity, tokens or even NFTs in addition to cash.” Finally, if you’re sitting on digital assets then you can put your money to work by locking them up in decentralized finance platforms to earn yield — but remember to be very careful with the platforms you chose because this option is very risky.
3. Build connections
“Building connections helps founders raise money,” says Metta. “If you don’t have connections it’s going to be hard for you to get the startup capital you need. Web3 gives the opportunity for platforms to decentralize the way the money is raised.”
We live in a highly social world. With so much opportunity, it can be easy to make the right connections if you stay active and do your best to learn more. The most common way that founders go about raising money when they don’t have connections to investors is by bringing on seed investors and advisors who do. For example, in an insular community like Silicon Valley, it is less about how many people you know and more about who you know. You can know few people yet if you know the right people in venture capital those relationships can go a long way. Bringing on an advisor who can make vetted introductions is a common way to get pitch meetings scheduled. Give the advisor a small equity package and they will work hard and long hours to open up their network to help secure valuable pitch meetings.
Even if the investor passes, you can always follow up to ask the investor if they mind making an introduction to another investor friend of theirs who they think might make a better fit. Always research the investor’s portfolio of startups to understand common themes, sectors, and stage of investment fit into that investor’s existing portfolio and what motivates them to invest. Also, remember to keep the dollar value range within their typical check size because if it’s outside their typical range then the chances are higher that they’ll pass.
It’s still early. Good ideas rise to the top. If you have innovative concepts in mind but don’t know how to integrate them into the traditional market, it may be time to get started as an entrepreneur. Who knows, maybe Metta World Peace will invest in your company?