An insider's guide to making a great pitch to a crypto-native VC

There have been a million guides about how to pitch VCs. But building in crypto is different than in other Silicon Valley-centric technology startup disciplines. Crypto is special in that you can spin up a smart contract from anywhere and immediately offer a product to the whole world.

The fundraising dance is different now than it was in the old world. A founder used to seek out connections to VC investors, hoping to culminate with a packed Monday partner meeting schedule. We still typically ask founders to meet our full investment team before we make an investment, but the format has evolved — Sand Hill Road has been traded in for Zoom — but we’re still looking for founders with unique visions of the future and the ability to execute.

Clarity of thought is highly prized, so the process still starts with a great deck.

(Note: some founders who are well-known for prior accomplishments can get away without making a presentation. This is because they are able to display their clear thinking via another medium. The points below still apply, even when it’s a conversation.)

We receive hundreds of inbound pitches a week — some from entrepreneurs we actively sought out, but many from those who write to us eager to share their visions of the future. Investors are in the business of saying “no” much more often than they say “yes,” but we have observed some ways that founders can better articulate that future.

As a founder, execution of your “main thing” should be the “main thing.” But you’re also always selling — yourself, potential hires, and your product, mission, and community. A great concept will be hindered by a poor presentation. Here are seven examples we’ve commonly encountered.

1. The lack of a “Why Now” inflection

“Why Now” is often the most important question we ask at Standard Crypto when evaluating investments. There is a saying in venture that “being early is the same as being wrong.” A fantastic idea is not invariant to timing. Even the most amazing DeFi protocol had zero chance of success in 2013. Where would it have been built? Were users ready to participate in a financial system based upon assets they couldn’t get their heads around? A lack of a “Why Now” can make an investor think the very worst thing they can: Dead on arrival.

Instead: Explicitly address “Why Now” in a dedicated slide. A strong “Why Now” is about an inflection point and a subsequent market opportunity. Inflections are usually in technology or behavior — and ideally both. If there’s a specific reason why others failed historically, but you can be the first to succeed — share that! If nobody has ever tried before because the infrastructure was lacking but that is no longer the case, that’s a great reason too. Good answers are often very simple.

Examples:

OpenSea, 2017

• The inflections: The first NFT was created in 2014, but the first breakout NFT project was CryptoKitties in 2017. A handful of projects spearheaded by CryptoKitties created a set of NFTs that were actively sought after by users. Though the numbers were small, it was clear that users wanted to buy and sell a new type of digital good.
• The market opportunity: That validation led to demand for a marketplace to facilitate the exchange of NFTs — aided by coalescence of NFT implementation around a small number of open protocol standards (including ERC-721) — because creators wanted to emulate CryptoKitties’ success, thus making a two-sided network effect possible.

A new Bitcoin wallet, 2023

• The tech inflection: Taproot brought efficiency gains to enable more material data storage on Bitcoin.
• The behavioral inflection: People inscribing a million ordinals on BTC ranging from images to text to videos.
• The market opportunity: A new Bitcoin wallet that offers a way to visualize, transfer, and inscribe ordinals.

“Every startup is founded on a hard-earned secret: What have you done to uncover the secret and what is it?"

2. Not explaining why you’re the right team

A lot of decks we see have vague details on who is building the product and why they have an edge. Being (pseudo)anonymous is OK — but you still have to paint a picture of why you’re the right team. Avoid artificially impressive sounding titles over substance or, even more concerningly, having a “blockchain consultant” responsible for the “crypto parts.” Outside of crypto, it would be a red flag if there was a “computer consultant” on the team. If you’re building a crypto network, you should be intimately involved in what you’re building. You don’t have to write code or even be technical, but why your team is best positioned to win should be something that you’re able to articulate — if it’s hard to explain it to us, it could be hard to explain to potential hires and your users!

Instead: Why are you the best equipped to uniquely discover and pursue this opportunity? Share background details on your team members and why they are differentially equipped to make your vision a reality. Including LinkedIn links or concise bios are great ways to illustrate someone’s path. Don’t confuse passion for being a crypto user with ability to build great products (although it certainly doesn’t hurt!). There’s no shame in having built a product at Google — but help us contextualize that experience within your vision. If your background is non-traditional, that’s totally fine too. Maybe you’re an anon with a track record of thought leadership on Twitter. Whatever your path, please do share it and help illustrate it — users may ask the same questions when deciding whether to use your product. Every startup is founded on a hard-earned secret: What have you done to uncover the secret and what is it?

Examples:

• Pavel Durov built VK, the largest social network in Russia and went on to build Telegram, one of the largest social networks in the world. The hard-earned secret for Telegram was that at-scale social networks didn’t offer privacy as a first-order feature.
• Instadapp founder Sowmay Jain was writing articles about public equities in India while in high school and dropped out of college after winning ETHIndia. He was an early and prolific blockchain builder and built products to solve his own problems (e.g. refinancing in DeFi is painful!) and by extension other DeFi power users’ too.

3. It’s long-winded

It’s great to have a longer-form document like a detailed technical spec or whitepaper, but that shouldn’t be your entry point into introducing your project to someone. Investors value conciseness and clarity of thought.

Instead: Distill your materials down to key points on the problem you’re solving, your approach, who you are, and what you want from an investor. Ten to fifteen slides are always best. If you must have more, use an appendix or consider channeling your energy into creating a metrics dashboard that will automatically update.

“It can be concerning to hear your vision of a VC's post-investment involvement is to help get you listed on exchanges as quickly as possible"

4. Bad abstractions of what good VC investors do

Great founders put their (hopefully great) investors to work on their behalf. But be aware that it can be concerning for an investor to hear that your vision of their post-investment involvement is to help get you listed as quickly as possible on exchanges.

Another common mistake is a hyper-focus on your VC investors as your users. If you’re building Farcaster, then yes you definitely want your investors as users (I’m @a!). Or if you’re building software for VCs like Affinity, that also makes sense. But if you’re building a perp DEX on a new sovereign rollup, then looking for your investors to be the biggest liquidity providers may hurt you. It’s much better to work on building sustainability in a network where people naturally want to provide liquidity (this can be hard work but compare it to learning to fish) versus relying on someone to take care of it for you (compare: being given a fish). If you excessively prioritize this it also may lead to you taking money from the wrong kind of partner.

Instead: Come in with your top of mind challenges and risks – this allows you to “try on” the investor and see how problem-solving together feels! You could have a couple of concrete and targeted asks or just a large problem that’s a focus area.

Examples:

• “We are looking for a securities lawyer who understands crypto perp DEX projects.”
• “We are looking for an engineer comfortable with finite fields who also has low-level optimization experience to write ZK circuits.”
• “We are looking to bring on a CMO, but aren’t sure if we want to prioritize a performance marketing or content marketing background.”
• “Should we hire a PM now or later?”
• “Should we introduce a fee into our protocol or design a hyperstructure that monetizes elsewhere?”

5. Poor command of metrics

Demonstrating how well you understand your business by your selection of metrics is nearly as important as the metrics themselves. Avoid vanity metrics like how much money you’ve raised or how many Twitter followers you have (unless it fits into a greater strategy).

Instead: There are a plethora of generic indicators that apply broadly to many projects (TVL, market cap, number of social followers, etc.) but great founders understand how to select the right metrics. Those metrics could be general or could be highly specific to the nature of your product. It’s particularly helpful to contextualize the development of your metrics based on how much money you’ve spent.

Sometimes it’s easy: If you’re building a SaaS company in crypto that sells to enterprises, you’re likely tracking ARR and several other generic indicators like gross margin. If you’re building a DEX, you likely care much more about trading volumes than TVL as a measurement of usage — after all, that’s the paying side of the marketplace. Choose metrics that help articulate where the protocol is today and have an eye toward where you want to go. It’s important to have goals that are both ambitious and realistic.

Examples:

• You previously raised $2M for your new crypto game, and you still have $900K of it in the bank. Those funds have gotten you to a launch and 200K monthly active users, with 90% organic acquisition. Your goal is to get to 5M MAU and attain $3M revenue via royalties NFT secondary sales over the next 18 months.
• You received a $200K grant for a novel liquid staking derivative and used $120K of it to launch mainnet, and achieve $100K of protocol revenue. Your goal is to get to $2M protocol revenue in the next 12 months by spending $500K on a referral program and also expanding your product offerings to include re-staking.

6. Absence of intentionality in a token

Tokens are a lot of things: They present a unique way to incentivize early stakeholders; offer participants a way to govern and truly own the networks they use; and bring liquidity much earlier in an investment’s life cycle.

As investors, we care deeply about how tokens are distributed, where they are allocated, and how the network can be built in an enduring way. But if the third slide in your deck shows a pie chart of your cointable with a plethora of line items for market makers, advisors, and marketing, it worries us that you’re only focused on making a quick buck.

Instead: Frontload what you’re building, where you are today, and why now is the right time. It’s helpful to have a thoughtful breakdown of allocations later in the materials to illustrate how you’re going to decentralize, build a community, and fund future developments in tokens (if applicable). Focus on the mechanism and how the token fits into it, not how the token trades. It’s also helpful to know if your token will be fixed-supply or have emissions — it’s really hard to “re-cap” a token network, so make sure your token plan is comprehensive and robust.

Questions to consider answering:

• What do you hope to achieve before introducing your token?
• What does it allow the community to control? And why is that a worthwhile tradeoff compared to a more governance-minimized mechanism?
• How does value accrual work?
• If you plan to distribute tokens to users, what behavior(s) are you hoping to motivate?
• How do you plan to allocate the token supply? Pay special attention to incentivizing future team members and investors (if necessary). Also consider identifying major initiatives like airdrops or a community grant program.
• How does the token fit in with covering costs for maintaining/improving the protocol in the long term?

“In this environment it’s incredibly important to plan for enough runway to show traction commensurate with the next round you’d like to raise"

7. No thoughtful spending plan

We love it when you want to spend money to accelerate your growth. But we want to know your ideas and plans. Have you had success with referral programs and want to double down there? Awesome. Do you want to run a Super Bowl ad? Well, that’s not for everyone, but if you’ve had success in the past, then highlight that! (Hat tip to Gabe Leydon and his second Super Bowl ad, this time for DigiDaigaku.) Of course marketing isn’t your only expenditure, so we love to see a cogent hiring plan as well as breakdowns of other major expenses.

Instead: Marketing can be a line item, but share your plans, your goals, and how you’ll measure success¹. We also like to see thoughtful (and realistic) hiring plans in line with your goals. In this environment it’s also incredibly important to plan for enough runway to give yourself time to show traction commensurate with the next round you’d like to raise. In most cases, you’ll want to target 24-36 months of runway after the financing. It’s a lot harder to raise money once you dip below 12 months of runway, especially in a fundraising environment like 2023.

Bonus point: 8. It looks backward and not forward

If you’re building something highly technical where the nuance is in the details, by all means give background information that helps an investor get up to speed. But you don’t need to spend several generic slides explaining what Arbitrum is and how much it has in TVL to show your idea is viable. Similarly, it’s not helpful to provide a list of comps as to who raised how much money with a similar idea.

Instead: Tell us what you believe and how you’re going to get there. Are you building a new Bitcoin mining ASIC that has better energy efficiency? Then you should include background on current benchmarks and how your approach enables you to outperform it. Use what has happened historically to highlight the opportunity you’re addressing with specificity and explain key choices you’re making.

1. Aave governance forum discussion on how to measure success in liquidity mining