Raising Money During Bear Markets | European Blockchain Convention

foreign works good um so hey thank you thank you for coming um I will try to do a very honest you know conversation right um about what's happening with fundraising entrepreneurs they're already fundraise or looking to fundraise but first like let's start with a short introduction which I do want to start sure and so uh I'm GP of Cerulean Adventures we invest at the intersection of web3 and climate and sustainability and I that's pretty quick hi everyone I'm Maria Alegre I am the founder ntp at floor eventers and we've run a fund we invest in where web3 impact funds so invest in emerging market fintech and climate before this I was a Founder so I just want to say um anyway like we we we're a VC but we've also several of our partners have been Founders and and have lived the experience of also fundraising in hard times so I'll talk from both experiences all right uh I'm a moss um originally also a Founder raised um I think in total around 100 million dollars from different VCS um now running my own fund node Capital which is a fun focus on a decentralized infrastructure um yeah so I'm really happy we have the the conversation between entrepreneurs and and wishes and um it's always you know it's always very hard to raise money putting aside 2021 which was a crazy year which I think you know there were entrepreneurs sending a deck and getting the term sheet right after um but you know if it was already hard for even experienced entrepreneurs there is always this chicken and egg problem that entrepreneurs are asking me you know all of you those VCS you're looking for experienced um uh entrepreneurs right um so how do I start if I never raise money um and how do I do that in such Market Maria did they want to start from dangle of the entrepreneur as well um yeah absolutely so one clarification I would say is that in in maybe we're looking for other stuff we invest in pre-seed and seed and we don't always look for experienced entrepreneurs we don't look for Founders that have already started a company we like that we think that's that's a good experience but when we look at the founder we measure traction of their life in a way we look at what they've done what they've accomplished how they have measured their own success how they make decisions how high they are trying to get in their lives and that's that's how you see Traction in a precede founder of visit company um I guess I'm also biased because I raise money as a uh you know like as a Founder without experience I I had had a job for a couple years but I hadn't had a company I hadn't managed people I hadn't raised money and eventually we were able to raise because our business had traction because we were able to meet some companies uh some investors and and tell them what we were planning to do and then meet a month later and do that and then meet a month later and deliver on whatever we had said so anyway uh it was more proven traction than experience in all right Judd like we discussed before about um entrepreneurs approaching us right like you know they're sending us messages in um Twitter and then on LinkedIn right um uh first like do you feel the difference between 2021 to uh today and then um you know how would you suggest with all of this you know to to raise above all the noise what do you suggest those entrepreneurs so well the first question was is there a difference between 2021 and now right oh absolutely right like I get to Exhale a little bit and read a deck which is really great all right like I get to talk to you and a lot of things Maria said about your background actually understand where you're coming from why you want to do this that's all really important to understand right if you're going to start a venture we want to be we want to work with you for a long time and we want to feel that you want to do this for a long time right and it's going to be hard so we we screen for that we have various ways of doing that and then you know what was different in 2021 is that you had a bunch of funds who just raised like a billion dollars who were like let's deploy it in nine months which I don't really know why they decided to do that but it wasn't a great decision in 2023 a lot of us now have the ability to slow down get to know you get to know what you're doing get to understand the market which is great it's great for you and it's good for us right that's like the major difference and then the second part of your question remind me I mean what I'm asking is like Indian people are sending new messages and you just can't answer all of them right yeah like how how can I as an entrepreneur you know kind of like raise make noise yeah breakable raiseable of all of the noise right yeah absolutely I think I'm gonna answer this as if I was trying to get you to invest in my company okay so if you remember you know what did Emma say when he introduced himself he said node Capital invest in decentralized infrastructure right so number one just read his website right like just get a feel for what gets Amos going why does he want to invest in things if you're not doing decentralized infrastructure don't waste your time in his right it's very simple right I think that's just number one for me I get so many of these where I'm like I love this idea it's not something that a climate infrastructure fund can invest in right so like save yourself the time it takes two seconds right like hitting me up in LinkedIn hitting up on Twitter whatever just understand the space that we're all we're also obsessed with things and bringing them into life but entrepreneurs are our conduit for that right and so like what you're trying to do in the world is what gets our attention and people you're telling them how to save time tell them how to race above the noise once they oh well I mean but honestly but that's racing involved in noise right so if someone is me I saw that you invested in that like you know this is very very interesting I'm doing that right he knows how to approach me he knows how to put like in the first sentence the things that will get me excited about to keep on reading right yeah absolutely that's the thing right is it like just any okay yeah absolutely and then also just it it's maybe a little bit vain but you put some time into understanding me and what I'm trying to bring into the world right then that gets my attention so funny how so you can say that now and you could not say that last year last year's like what do you need Founders how can we so just the Dynamics have changed a lot um anyway just noticing that so um what are kind of like the areas that you feel you know everyone we're excited about during the bull market and um kind of like faded away and what are the current trends that you feel you know have more traction in terms of Investments um I would say that maybe a year and a half ago we one thing to make crypto easy to use we thought there would be many use cases that maybe they're not core to our thesis like we we want crypto to be useful for real people and therefore we're Investing For example a lot in payments and money transfers and money being International like real uses for real human um of crypto and however last or a year and a half ago we thought well maybe gaming um because you know like in in Mobile gaming ended up making everyone comfortable spending money on mobile and it was a clear way to lower the barrier for usage because it just gets millions of people like already with wallets and in comfortable using tokens and therefore the next step would be okay now that I know how to do that for gaming I'll just use it on the store right so that was our thought process at the time and there were some of those use cases of like gaming and nft and music that we thought okay it gets people excited and then it will become useful in real life um and before this I I started a gaming company or I worked at the gaming company who started a technology for gaming companies product so anyway like familiar with how that industry works but it was kind of an indirect approach to where we wanted to go and that for us is not the case anymore we're now going direct to our thesis and I would say it like that's possibly something that is shared by other VCS that some things were a means to an end and I think the easier thing is like if in 2021 I'm doing this but on this chain but the same thing like used to work but it doesn't work anymore like you really need to be different right now and doing something different in order to uh to raise money that's that's at least what I feel because there was a lot of copycats they were kind of like you know I'm doing that but all in Stark net I'm doing that but on Cosmos right it's like absolutely that's it's kind of like totally over right and I and I would add that that before you could have a very clear Vision an idea and now you just need to show me how you're gonna do it not only tell me but like show me how these different approaches is working and like start with the numbers um yeah I would definitely add to that right like these days if you're trying to get my money I am going to ask you what is your go to market and it can't just be like well we're gonna put it out there and people are going to use it right and I'm like cool to to Echo itai over here probably how are you going to get their attention right from the previous panel how are you going to sustain it what does your churn look like right these are all you know just even hearkening back to like the web 2 stuff that I used to do this is the type of thing that you needed to do if you're thinking of how do I get developers and users for my protocol uh that's all stuff that now is very very important that I did not see happening like a year ago um how do you deal um with the entrepreneur kind of like crazed very easily right money in 2021 and now starting to run out of money and kind of like not really understanding still like the real world which is not that easy um to raise money like what are you suggestions to them how do you kind of like help them adapt to this new environment yeah sure I think number one is just it's really difficult uh for them because it requires reflexivity and honesty with yourself at this point you have to think how did I get to the spot if you're not talking to me about it the next thing is I can help you get there and I have done this recently in like really five times in the last two months I've gotten we've had these conversations where we've had to say look I'm gonna be totally honest with you their company is uh what YC calls default dead right if you run the numbers this thing is dead in eight months 12 months you raise too much money you're looking at a couple options if you're still gonna stick with VC you're going to raise a massive Down Round the company will still be around but everyone who is here is going to be mad at you it's the way it is do you want to keep doing it right and it's just the facts right and hearkening back to our last panel right we did a similar one at youth Barcelona I remember exiting it like ending it on what is your advice to this crowd and I was like it's we're now coming down the other side of the peak evaluations and if someone is offering you a pre-seed term sheet at 25 million dollars don't take it like don't end up in the situation that that Amos is talking about here right because you're if you really crush it you'll have a nice chance at a good seed series evaluation but we're talking about that's three percent five percent of startups right like you might think you're in that one but how's your risk right take take the 15 10 million dollar one grow slower and get there more in more incremental steps um all right so that was the the advice back then right uh what would be the advice right now for someone who's you know getting like his first steps into crypto um looking into different ecosystems where should it build you know how should we build this fundraising what are the type of backers that it needs for his project before you could race around with 10 20 different investors with Small Checks it's much much harder to do that now um you're gonna need well you're gonna find yourself having less investors with bigger checks that have more time to get to know you that once they get to know you are able to make a bigger bet in general you're going to raise less money um so one thing that is different also now is that now you need a complete team before you could race with okay we're still missing the CTO but like this is this solution we have for now until we find the right person I don't think that's feasible I mean nothing is impossible but like that's much much harder right now um just having a complete team maybe someone go to market someone technical um and then in general just have a strategy for not dying if you don't raise right like always have a very clear Plan B and and yeah I mean it's just endurance and resilience yeah I think uh like to me looking as a as an entrepreneur kind of like lived beer bull market um is all about being loyal for what you want to build and and build it not just for the next book but actually because you think what you're building is is Meaningful and people will care about and um you know there are a lot of good entrepreneurs that I know in crypto that keep their even you know regular job building stuff on the side and when they're ready you know have more Comfort they're comfortable what they've built they're living their job going to raise money Etc so it could be a process right now then you know all of those stories of your friends maybe you kind of like Drop School drop their job raise money at uh I don't know 40 million dollar valuation in 2021 that just doesn't exist anymore um yeah okay um maybe we give uh some time for questions if anyone want to to ask anyone here on stage foreign how do you convince a VC from being just an investor to a lead investor I can tell you this from one who rarely leads so probably the kind of person you're trying to convince most of the time it's not really up to us like where our funds are not structured to lead right so we come out of it with like almost specifically like in the documents that incorporate what we do we're we're literally saying we don't lead because we don't either we don't have the capacity to the funding the due diligence all that it's it's a different type and I'm gonna probably kick it over to Amos too actually because he does lead sometimes and he can he's trying a little like so I think like first know if this investor can lead you around or cannot lead you around and focus mostly on leads in the beginning right because that that's the important part once you have the lid everything else will kind of like fault especially if this lead have like a good name and you know people trust his due diligence and and what he thinks about so I'll definitely say like folk try and focus on the lead let's just ask too just straight up in your first meeting do you lead yeah and I would say do you lead and at what size because small rounds we don't need if three million dollars um which would be medium now it's small in other times um it's worth different sure Maria so between Angels what should I choose like Angels or VCS in the beginning I angels are great way to recruit mentors because you cannot pay mentors you cannot pay the good mentors because they are meant well yeah like they you just can't pay them you can't afford it in in having mentors give you 5 10 25k is a way to align incentives and if you open around an angel round at one two three million evaluation that gives them a stake before then you're raising um at a higher so so they can make intros they can give you advice and there's a time for Angels later uh just has a lot of value right um do we have another time for questions we can do one last one all right so go ahead yeah so specifically speaking to impact and refi I think a lot of people that are working in that space are realistic and know that it's not the most lucrative area to work in and maybe don't have that like money driven mentality but are very adamant about making change and creating Solutions so what's your tip for someone in that area to click it over and make it like a sustainable venture well it's different to be a sustainable business than to be a VC backable business we choose to invest in this area from the VC perspective we're still looking for VC returns and we do find a lot of conversations with companies that we are happy they exist we want to root for you it's just not something we can give you VC money for because you won't be able to follow that path doesn't mean like I don't know we end up trying to support or connect in different ways and you just need to know what kind of company you're trying to build yeah just to Echo that I think like you know the Venture outcomes like we're the douche here we do by fiduciary duty we're constrained but I hate that word but uh in more ways than one but yeah that's basically just the the brass tax of it right and so I think like how do you maximize our attention on that type of stuff honestly there are completely unaddressed markets and impact that are massive that only some people who are close to them as local actors even see that's the real opportunity with this stuff right when you actually are like look here's you know going back to the remittance of stuff there's still a lot of unexplored cracks there that are massive Market opportunities you get into one of those then you get the refi and you get the actual Venture returns That's The Sweet Spot thank you very much thank you everyone we'll be outside if you want to ask more questions thank you thank you [Applause]