Founder Readiness: How to Raise Pre-Seed/Seed Round | Mickey Graham, Alex Essle, Kay Phillips,Aryan

How's everyone doing? Okay, I know that there's a bunch of conversations going on. if we could move towards the back of the stage so we can get going with the next one because we're about to find out are VCs still investing in crypto in this market in this economy. Uh and we've got Mickey u moderating this panel. I will leave it to him to do the round of intros and we'll take it from there.

All right, folks. If you don't mind taking a seat or moving the conversation to the side of the stage, please.

Okay, great. Thank you. Mic check. Everything sounds good. Awesome.

Well, thank you for joining us. Hello, everyone. My name is Mickey Graham. I am a co-founder and general partner at Metlayer. We are a $25 million early stage venture fund focused on the intersection of traditional financial services and the onchain economy.

With me I have three really incredible funds represented. Um Maven 11, CMT and Hivemind. Some really really great early stage investors that I know are very active in this environment in this market. So I'm looking forward to spending 20 minutes kind of picking their brain on what they're excited about, what they're seeing, what their sentiment is. Um, but maybe before we jump into all of that, can I just have you three introduce yourselves?

Should I start then?

Yeah, sure.

Um, I'm Alexander. I work at Maven 11. We're a crypto venture fund based out of Amsterdam. We've been investing in the space since around 2017. We're currently deploying out of our third fund.

Uh, it's $110 million vehicle and we've always sort of focused throughout the three vintage and early stage companies. So, the preede to seed stage companies, but we've done a couple of series A's here and there. Um, on a personal level, I've been in crypto since 2017. I guess I fell down the crap the crypto rabbit hole uh during the ICO boom back then. I was still at university.

Uh, got nerves sniped pretty hard, I guess, like many of us here. Um, but yeah, so I've been working at Maven for the last two years, uh, and, uh, focused more on sort of the onchain uh, DeFi side of things. Um, but yeah, I'll keep it at that.

Hey everybody, it's great to be here. Um, my name is Kayla Phillips and I'm a VC at Hivemind Capital. Hivemind is a crypto asset manager. We have been around for about four and a half years now. And we're a multistrat firm.

So, we invest across venture, liquid tokens, public equities, and NFTTS. On the venture side, we are actively deploying right now in companies um from series uh sorry preede through series B and we are also gearing up to raise our next fund.

Hey guys, uh my name is Arian. I'm with CMT Digital. We are a blockchain venture firm. We're currently on fund 4. Uh this one's a $136 million vehicle.

We like to invest early stage at the kind of preede seed series A stages. Um we're series agnostic in terms of uh sorry sector agnostic in terms of what we look at with generalist with across blockchain. Um but really looking for use cases of blockchain um that result in some net new activity or some net new efficiency gain that wasn't possible before. So it's not really limited to just you know cryptocurrencies. Um, pleasure to talk today and thank you for having me, Metallaya.

Awesome. Thank you. So, I think as you guys heard in the intro, the um, the title of this panel was originally going to be are VCs even investing in this market. Um, so the four of us I know are all actively deploying capital, but I think that is the sentiment that a lot of founders are feeling right now. Um, so I'm curious to hear from the three of you.

Um, generally kind of what are you seeing in your investment committees? Kind of like what is the vibe right now? What kind of deals are getting done? Is the bar higher than it's been historically? I think that's probably a good place to jump off.

Go.

I can kick things off. Uh, we we certainly still are deploying. I think it's not so much that the bar is higher. I think we're more uh aware of what sort of key indicators to look for uh when we're looking at these deals because we're in an environment where it's no longer just the momentum or the potential, but it's actually what they're doing today and what sort of partnerships they have in place today and what sort of needs are they fulfilling today. And I think the the stage that crypto is in at today allows for those efficiency gains to be observed and to be acknowledged.

And I think that is a fortunate position to be in because we haven't had that luxury in in cycles past. And that's something that's been keeping us excited amidst this broader market downturn.

Yeah. And and to add to that, I think when we when we do IC's today and compared to maybe uh like during the election cycle, right, the market is completely different in terms of how fast the deals get done. Um which allows us to spend more time with founders and understand their product more intrinsically uh look at the data, right? And I think also when you look at the like the altcoin markets, right? the companies that are doing well are the ones that have a fundamental business plan that sort of is effectively in a way uncorrelated with sort of how the sentiment is right like when you look at a company I think grass is a great example right like when you look at their token it's trading down but when you look at the company on the equity side of things they're they're you know they're growing their revenue uh month crazily uh there's companies like Rain right which is very popular among among uh crypto uh neo banks right that they offer cards again it's not a company that you see they don't have a token but it's a company that again is also growing um very very well so like I think there's a disconnect between what's what's happening in the sort of you know if you go on coin market cap versus what's sort of happening underneath in these uh different like I guess levels of where the industry is at and I think when to us this is it's good in one sense because we we're looking at more at the fundamentals of a company and I think this is something that we can also touch upon later, right?

It makes it harder to build a company when you have to actually prove that the business works, right? I think in the past like you had a great idea and then people would fund it because it was exciting and new. And now we sort of see that it can't just be exciting and new. There has to be some fundamental business logic that allows it to survive through these cycles, right? because in the end that is the most important thing is just to survive.

I think that's a great feat already. Um but yeah, so like coming back to the the IC's like we just have more time to spend uh with the founders and really understand where the business is going and it makes our job a little bit more interesting um because yeah it's just you get to evaluate the core business here and then see where the outcome is at. Yeah.

Yeah. Um I I feel like there are two different dichotoies that we're seeing play out in in the market. One is on the VC side and one is on the crypto side. So on the VC side, we're seeing the the rich get richer. So the mega funds or the mega firms are raising larger and larger funds and the industry is consolidating around them with more LP capital going towards them uh as opposed to emerging managers and smaller funds.

Um and so there are fewer VCs deploying and those VCs have uh a lot of capital to deploy and so uh they are typically investing large checks into rounds at inflated valuations. And on the crypto side, we're seeing this dichotomy between institutional capital flowing into the space and on the other extreme cryptonative folks saying that crypto is dead, which I don't think it is. But um we're seeing uh some founders and VCs kind of get squeezed on on both sides. um on the VC side and on the crypto side um where token projects right now are not getting as funded and where equity deals are receiving majority of the capital. I do think that that will change as we've seen with past cycles.

Um but that's that's where things are currently.

Awesome. Thank you for that. So part of what I really respect about the three firms on stage, Maven 11, Hivemind, and CMT, is that they are very institutionally trained and professional asset managers. Um, so I know there are a lot of aspiring entrepreneurs and founders in this room. I think it'd be really helpful to talk about kind of what you're looking for in founders, in teams.

At least within our IC, we spend a lot of time talking about founder market fit. kind of what what has this entrepreneur what right have they earned to kind of win within this market? So I'm curious to hear the advice you would have for founders when it comes to kind of building that credibility and that founder market fit kind of what are the steps you can take? What are you looking for in founders?

I mean from our perspective it's a uh multifaceted thing that we're looking at. There's of course founder market fit is important but I don't think it's necessarily disqualifying for a founder if they don't have extensive experience 10 years of building and an exit in their given field. I think the most important thing for us is really scrainess and the ability to move into opportunities that they spot. Um, especially in crypto, there can be products that look largely the same from a technical perspective, but one is successful and one is not. And if you look through the reasons why that has been the case, maybe some bridges or look look at very comparable products and where one has succeeded and one hasn't.

It's been purely that go to market opportunity that one has been able to execute on while the other hasn't. If you spot an opportunity in a market and you're worried, is this going to be seen as a pivot, it's it's that sort of decision-m that I think differentiates a good founder from a great founder. Being able to spot those opportunities, move into them quickly, have the conviction in themselves, and also be able to say, "Okay, maybe this isn't going the way that I thought it was going to," and move away before it's too late. Yeah, maybe to add to that like we also look at the same thing scrainess uh but it's also drive right I mean when we when we look at these companies I think in the past it's sort of the the sort of model was build and they shall come and I think that was very true in the beginning when there was maybe like 10 D5 protocols out there or 10 or like I mean 10 chains right I mean that but now there's hundreds of chains and a thousand D5 protocols and so like you're from from a founder point of view, like you do have to be able to sell what you're what you're building, right? Like you can't just rely on sort of the market finding you or like you know doing some tweets.

Like there's there actually has to be and this is something we really focus on like your ability to market your product in a way that you can get to your target audience, get to your clients. I I mean this obviously depends a lot on what you're doing, right? If you're a D5 protocol and you're targeting retail like can you communicate your product in a way that people understand oh this is why I should be depositing here versus other other place like what is the risk that I'm taking like these communic like communication of the product is so crucial in making sure that you attract the right people on board and I think that's often overlooked um and it yeah in the end like we're all we're doing sales and in the end it's a little sad when you think about it because of course a lot of you guys are great engineers and great minds like and you just want to build the perfect product but it it doesn't really matter if no one is using it right and then so that is a missing step that's super important and often gets overlooked and yeah it is it's a bit related to sort of the grittiness of a founder being like perseverant and uh understanding what the actual product is on the eye of their customers and I think yeah for us that's a really really important part in our decision process Yeah, echoing what the other panelists have said, for us, we we do look for deep domain expertise in a founder, that doesn't mean that the founder needs to have founded a company in the past and or exited that company. Um, but the the product that they're building and the target audience that they're looking to sell that product to should feel authentic to their expertise and and past experience. And we put a lot of emphasis on the go to market.

So ha has has the team really thought through the go to market strategy. Have they already tested that go to market even if the company is at kind of the earliest stages and this is the first round that they're raising? Have they done the necessary customer discovery to and have they actually had conversations with the people that in the future they will look to sell to to validate what they're building and to see if there is initial product market fit and demand among that audience.

Just one thing I want to add because we on our investment memo we have five different categories relating to a founder and this is this is you know probably shouldn't be saying this but it's free advice. Um, and we've covered four of the categories. The only one that hasn't been mentioned is talent magnetism. So, what sort of talent does that founder attract to the company, especially when we're investing so early, that's something that I think, you know, carries throughout the life cycle of that company and is something important to focus on too.

Thank you. That's that's really great. Uh, some inside baseball into how VCs think about evaluating founders and teams. Um, so sticking on the general topic of advice and kind of how to successfully run a fundrais process, um, I'll ask two questions. Maybe the negative version and the positive version.

Um, so the negative would be what mistakes are you seeing founders make right now? Like how is the market and the playbook in 2026 different versus past cycles, 2021 and 2024? We've seen this a handful of times. um teams kind of putting together party rounds, no strong institutional leads, and then approaching firms like the ones above um kind of and trying to structure an opportunity or a lead and seeing it kind of not go well. So, I'm curious if there are common mistakes or pitfalls you're seeing teams make.

Um and then the flip side of that would be what kind of other strategic or tactical advice would you have for founders kicking off a fund raise? Um, would you say kind of if they don't tick all of those boxes we were talking about earlier, should they potentially be waiting for better market conditions or should they be out there kind of grinding it out, trying to put together a round? So, tell us a little bit more about mistakes or advice you would have for teams going out in this market.

I mean, it really depends. There's many levels to to a mistake, I guess. But like I think one thing that we see often and especially if you're you're if you're entering like a market that already exists and is sort of competitive, it's showing how you're different, right? Like I think I mean I've I've looked at 30 different prediction markets. They all look the same, right?

Like and the concept is the same. Like understanding what what is the what is the difference? uh and and why is it why is it so significant that you can challenge these incumbents and and why like how does that sort of translate again to your user base? How does that translate to why the tech is better and and why like just that communication is like very very important because I guess from because it's like from from the VC perspective like you see many deals and then I have to spend you know I need to be very you the it has to pop in in front of me very clearly why why you win like why are you different why is this a good deal for me and I think the communication there is sort of what often founders get wrong and I think the way to solve for this is you should talk to your your friends in the industry or if you're if you're if you have VC friends as well to sort of get feedback before you do pitches, right? because that is these are easy mistakes because you probably already have a good answer to it or or some some pretty decent answer and it's about sort of making sure that it's front and center whenever you enter a conversation specifically when you're when you're already sort of working in this like more of a crowded sector I would say if you're obviously a very differentiated product that no one's built before um then I think that there the conversation is a little bit different and it's about sort of really explaining in in layman terms and or if the VC is very technical and this sort of is fits the bill then again why why is this important right yeah

um one mistake that I've been seeing a lot in the current market is founders not prioritizing and taking a more active approach to fundraising so I've seen a lot of founders taking calls here and there um but letting their runway get below 6 months because they have not been super proactive about running a tight process. And once you get to that point where you have less than six months of runway, you uh it kind of shows in pitches because you look a little bit more desperate and you can't be as selective and strategic about who you take money from. And that's really important. And so my advice would be to start early, give yourself plenty of time to to put together a good process, and then run a really tight process. So once you you're at maybe let's say 9 months out, maybe even earlier than that, 9 to 12 months, um start having some initial informal first conversations with VCs just to start putting feelers out there.

But don't take first calls after that. until you're actually ready to kick off your process. And at that point, come prepared with a full data room. Uh I I personally really like to see a well-ritten, thorough investment memo that summarizes for VCs basically why why they should invest. Um it gives you as a founder an opportunity to basically write them an essay persuading them to invest in your company.

And so putting those details together makes it really easy for a VC to do do their job and get to a yes. Um and then uh alongside that put together um like an investor wish list. So a list of wellressearched investors that make sense uh and align with your company's focus and run a tight process ideally in a couple of weeks. Um sometimes these stretch out over um you know a month but uh run a tight process where you are having backto-back calls with VCs doing first calls then a couple weeks later doing second and third calls and getting to the IC process where you're building a lot of momentum and some FOMO and hype among VCs so that you can get your round closed quickly. The uh biggest mistake that I think founders are making right now is going to sound somewhat unintuitive uh or even wrong.

I think some founders are focusing too much on product. And what I mean by that is so I I'm the head of research at my firm. So I'm looking at the technicals a lot and I care about the technicals a lot. But rarely does the market care about the technicals nearly as much as I do. And it's really easy as a founder to want to optimize every single part of your product to the maximum, but in if that means you neglect the right to win in taking that product to the market, it doesn't matter.

And so I think not neglecting a very specific strategy for taking that product to market for putting it in front of the users in a way that it's really beneficial for them to use your product over another. I think stable coins is a great example of this. There's so many different stable coin management products that can apply to any institution, but why should they use yours? Do you give them netting, for example? Do you give them some sort of capital efficiency beyond just stable coins?

I think those sort of product details really matter. And if you can align them with the go to market, it puts you in a much stronger position.

Just one final point that I also wanted to mention is this is more on sort of when you're you're doing a round and you're you're talking to a few VCs, right? And then it's understanding what uh what sort of what you can tell another VC in terms of like do you have any commitments or anything like that like I think it's it's pretty obvious thing but don't lie right I think uh this is often what happens is like VCs we all talk to each other right we're we're friends right like so when when I get a deal and I'm interested and I know Kayla sort of also looks into a similar thing and you and you tell me hey we're we're talking to Hivemind it looks like it looks like they're going to invest whatever you're trying to get me to FOMO and then I I check in with her and she's like, "Yeah, we just had one chat. I don't know." Like, it's a bad look, right? And I think it's a it's a pretty obvious thing that I'm saying, but it happens more often than you think.

And I think the the point here that I'm trying to make here is like you don't have to oversell yourself or overpromise or try to overd deliver. I mean, I think maybe this a little bit the European in me. Just just give me the facts. Uh like I'll I'll judge you by what I see, right? And if you if you overpromise or if you say things, I'm going to go check them, right?

That's my job. I have to underwrite you guys. Uh and so that is that is yeah something we see and it's often it often sour the deal for us and uh we've we've passed on a couple of deals because of that. So just

awesome. Yeah. Well, really appreciate it. All super tactical advice. Um so two minutes left.

Maybe we can do a little bit of a round robin. Just 30 45 seconds each. I'd love to hear some of the markets um or categories you're most excited about. Um so maybe we can just go down the line.

Yeah, I mean from us from our perspective, we really like the intersection of Tradfi and DeFi Rails today. Uh the opportunities that allow Tradfi liquidity to move into DeFi environments, we think will provide a primer for some of the larger scale open-source open network type opportunities that exist within DeFi. they become far more viable once there's a larger liquidity base to support them. Uh also excited about deepin where they can kind of offload uh ex essentially capital spend from legacy providers. Telium T-Mobile is a great example of that.

Those types of partnerships for outsourcing capital expenditure to a more unit econ unit economic efficient you know medium I think is something that we're excited about too. Yeah, we're looking at similar areas. So, also focusing on market infrastructure and especially institutional infrastructure within that that bridges the gap between tradi and defi. Um, another area that we've been focused on is AI infrastructure. Um, thinking about uh hardware and software acceleration and other areas too including heterogeneous compute and speculative decoding.

I think from our end we've also sort of trended towards this direction of looking into sort of the intersection between DeFi and well Trafi I guess um but I I don't think we are sort of that's our core focus in any way like it is my focus that's sort of what I'm very interested in the credit space um but at the same time uh I think fundamentally what we want to invest in is are good businesses and that can be any flavor right like I think we've sort of realized that the industry is shifting more towards like a like fintex um just because of what sort of blockchains are very useful for in the finance world like stable coin transactions and everything it's just a great PMF for for the technology and so we do see ourselves sort of going more in that direction but we also are looking at you know traditional sort of SAS companies that are very much crypto adjacent or very much sort of in this in this space um but yeah I don't I don't like I don't want to shuh her on us as a fund into like a specific category. But yeah, we look at everything and we're we're interested to talk to everything and then it's more of a question is is it a good business? Then we'll invest and if it's not then uh yeah, I guess.

Okay, great. Well, how about a round of applause for our three great panelists? We really appreciate you taking the time to be here.