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.
A new Bitcoin wallet, 2023
“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?
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.
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.
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:
“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.