The Crypto Fundraising Methods in 2024 (2024)

Crypto fundraising methods are transformative avenue for blockchain and crypto projects to garner funding and amplify their concepts. Unlike conventional fundraising methods, crypto startups have a multitude of options to raise capital, such as ICOs, IEOs, IDOs, private sales, and various other avenues.

Despite the ongoing crypto winter and prevailing uncertainty in the market, crypto projects continue to draw investment. AltLayer, a blockchain platform, raised $14.4M in its latest funding round, which was Series A round held on Feb 19, 2024. Additionally, CryptoGPT raised $10 million to expand into the Asian market. These instances illustrate successful fundraising efforts amidst the downward trend in the crypto industry.

The crypto landscape might be experiencing a cool down, but innovation in fundraising keeps heating up. This guide ignites your project’s future by exploring the hottest crypto fundraising methods in 2024.

Also Read: Crypto Marketing Strategy: The Best Strategies in 2024

What Is Crypto Fundraising?

Crypto fundraising encompasses the diverse methods through which startups within the blockchain and crypto sphere secure capital for their projects or endeavors. Diverging from conventional fundraising, crypto fundraising introduces numerous decentralized and transparent mechanisms for gathering investments in their visions.

Within crypto fundraising, projects generate and distribute their own tokens or cryptocurrencies, representing a share or function within the project. These tokens are extended to investors or supporters in exchange for their cryptocurrency contributions. Operated by blockchain technology, all transactions or contributions are immutable.

Crypto fundraising facilitates engagement from a global spectrum of investors, eliminating geographical barriers on the blockchain, thus ensuring transparency and accountability. It has unlocked fresh opportunities for startups and entrepreneurs to swiftly and effectively access capital, oftentimes circumventing traditional financial intermediaries.

The landscape of crypto fundraising in 2024 is shaped by several emerging trends:

1. Decentralized Finance (DeFi) Fundraising: DeFi platforms continue to gain traction, offering decentralized fundraising solutions such as Initial DeFi Offerings (IDOs) and decentralized autonomous organization (DAO) fundraising. These platforms provide accessible and transparent fundraising opportunities while enabling greater community involvement in project governance.
2. NFT Fundraising: Non-Fungible Tokens (NFTs) are not only revolutionizing digital ownership but also fundraising. Projects are leveraging NFTs for tokenized fundraising campaigns, where supporters receive unique digital assets as tokens of appreciation or ownership rights, thereby adding value to the fundraising process.
3. Layer 2 Solutions for Scalability: With concerns over the scalability and high transaction fees of main blockchain networks, projects are turning to Layer 2 solutions like sidechains and rollups for more efficient and cost-effective fundraising processes. These solutions enable faster transactions and reduced costs, making fundraising more accessible to a broader audience.
4. Regulatory Compliance and Security: As the crypto space matures, regulatory compliance and security become paramount in fundraising activities. Projects are increasingly focusing on adhering to regulatory frameworks and implementing robust security measures to instill trust and confidence among investors.
5. Tokenization of Real-World Assets: The tokenization of real-world assets, such as real estate, art, and commodities, is gaining momentum as a fundraising strategy. By tokenizing these assets on the blockchain, projects can fractionalize ownership, providing investors with access to previously illiquid markets and diversifying fundraising avenues.
6. Cross-Chain Fundraising: With the proliferation of interoperability solutions, projects are exploring cross-chain fundraising strategies to tap into multiple blockchain ecosystems. Cross-chain interoperability allows for seamless movement of assets across different blockchains, expanding fundraising opportunities and reaching a wider investor base.

Effective Crypto Fundraising Methods Shaping 2024

Venture Capital Funding: A Cornerstone for Crypto Startups

Venture capital (VC) funding stands as a pivotal avenue for crypto startups to secure financing for their initiatives. In this funding model, startups solicit investments from established venture capital firms specializing in the crypto and blockchain sectors. Remaining a steadfast choice for fundraising, VC funding has been a cornerstone for crypto and blockchain startups since its inception.

The emergence of venture capital funding for crypto and blockchain startups dates back to approximately 2013. This period marked the rise of Bitcoin and the growing realization of blockchain technology’s potential.

These VC firms offer funding in exchange for equity or tokens, empowering startups to drive their development and expansion. Despite occasional fluctuations in crypto funding, VC investments persist as a crucial catalyst in nurturing innovative projects within the blockchain industry, thereby fostering continued innovation and adoption.

Crowdfunding

Crowdfunding within the blockchain domain entails gathering capital from a dispersed network of individuals who contribute funds to a project or venture, typically receiving tokens or incentives in return. Leading platforms facilitating these fundraising endeavors encompass Gitcoin, Meridio, Koinify, QuantmRE, and Brickblock, each offering diverse models such as reward-based, donation-based, and ICOs. Crowdfunding has emerged as an egalitarian method for financing blockchain endeavors, enabling a broad spectrum of participants to back projects and foster the expansion of the crypto ecosystem.

Initial Coin Offering (ICO)

An Initial Coin Offering (ICO) serves as a method of capital fundraising whereby new cryptocurrencies or tokens are issued to investors in exchange for established cryptocurrencies like Bitcoin or Ethereum.

ICOs experienced a surge in popularity during the crypto boom of 2017-18. In 2017 alone, ICOs raised approximately $5.6 billion, marking a substantial increase from the $240 million raised in 2016. This trend persisted into 2018, with ICOs accumulating around $7.8 billion in funding.

ICOs provided crypto projects with access to a global investor base, although they encountered regulatory hurdles due to their unregulated nature. On average, an ICO attracted roughly 4,700 contributors, underscoring the decentralized and inclusive essence of this fundraising approach.

Security Token Offering (STO)

A Security Token Offering (STO) serves as a capital fundraising method wherein security tokens are issued, representing ownership in an underlying asset like real estate or company equity. Renowned for their compliance with financial regulations, STOs offer a secure avenue for investors. This fundraising model gained momentum around 2018 amidst regulatory challenges associated with ICOs.

Key STO platforms and launchpads, such as Polymath and Securitize, offer comprehensive solutions for asset tokenization and STO execution.

STOs have garnered attention due to their regulatory adherence, providing investors with a legally sound means to engage in blockchain-based investments while addressing concerns related to fraud and investor protection.

Initial Exchange Offering (IEO)

An Initial Exchange Offering (IEO) stands as a fundraising method in the crypto sphere where blockchain-based startups secure capital through cryptocurrency exchanges. Unlike Initial Coin Offerings (ICOs), IEOs are overseen by cryptocurrency exchanges, presenting a more secure option as fundraising is supported by the exchange’s reputation and rigorous screening procedures.

IEOs gained prominence in 2019 as a novel fundraising trend within the cryptocurrency industry. They emerged as a progression from ICOs, which had been the primary method of fundraising for crypto projects since 2017. ICOs faced increasing regulatory scrutiny and a tarnished reputation due to numerous scams and failed ventures.

Noteworthy instances of successful IEOs include the BitTorrent IEO hosted on Binance Launchpad, which amassed $7.2 million in just 15 minutes. IEOs afford investors the convenience of participating in token sales directly through reputable exchange platforms, providing access to deep liquidity and expanded trading options following their launch.

Initial DEX Offering (IDO)

An Initial DEX Offering (IDO) represents a crypto fundraising method wherein crypto projects secure capital through decentralized exchanges (DEXs). Diverging from traditional ICOs and IEOs, IDOs offer a more decentralized and accessible approach to fundraising, bypassing the need for extensive KYC formalities.

IDOs gained momentum in 2020 as a novel fundraising mechanism within the cryptocurrency domain. They emerged as a natural progression from ICOs and IEOs, both of which encountered various challenges.

The inaugural significant IDO was executed by the project Raven Protocol on Binance DEX in June 2019. However, the concept of IDOs truly flourished in 2020 alongside the surge of DeFi and decentralized exchanges like Uniswap.

Initial Game Offering (IGO)

Amid the ascent of GameFi and SocialFi within the crypto community, a novel fundraising method called Initial Game Offering (IGO) has emerged, specifically tailored for gaming projects seeking capital. IGOs enable these projects to raise funds by offering tokens to both investors and players.

The rise of blockchain-based games and the burgeoning popularity of the play-to-earn model have propelled the adoption of IGOs since 2021. While still evolving, prominent platforms for IGO launches include Binance and other blockchain-focused launchpads. The success of IGOs hinges on their capacity to engage gamers and crypto enthusiasts alike, seamlessly melding the gaming realm with blockchain investment opportunities. This fusion has catalyzed the rapid expansion of the GameFi sector and the increasing prevalence of IGOs as a crypto fundraising avenue.

Private Sales

A private sale in crypto fundraising is a method where cryptocurrency tokens are sold to a select group of investors before a public offering. This strategy, often executed through private placements or direct negotiations, is used to secure initial funding for blockchain projects. It incentivizes early participation by offering tokens at a lower price. Successful examples include Telegram, raising $1.7 billion. Private sales are favored for raising substantial capital from institutional and accredited investors.

Airdrops

Airdrops in crypto fundraising serve as a promotional tactic involving the distribution of complimentary cryptocurrency tokens to designated wallet addresses. They serve various purposes, including rewarding existing token holders, enticing new users, or stimulating platform engagement. Airdrops can range from distributing a few tokens to millions, with the primary goal being to heighten awareness and cultivate a user base. Notable examples encompass Ripple’s XRP, Stellar’s Lumens (XLM), and Uniswap’s UNI tokens. Although not a direct fundraising approach, airdrops can nurture a lively community and bolster token value, indirectly contributing to a project’s prosperity.

Strategic Investor Targeting: Success in Crypto Fundraising

1. Before seeking investors, it’s beneficial for a project to forge partnerships with related ventures and integrate their offerings. This demonstrates real-world use cases and validates the project’s feasibility.
2. Founders should master the art of pitching their product. With proper preparation, attracting investors becomes more manageable.
3. When considering angel investors, founders must evaluate their willingness to personally invest in the project. Demonstrating previous funding rounds or personal financial commitment adds credibility.
4. Venture capital firms typically enter at the seed stage or later. Collaborating with them involves defining roles and leveraging their expertise and network.
5. If multiple funding options are available, prioritize quality over quantity. A reputable fund not only provides financial support but also offers invaluable assistance in product development and marketing.
6. Due diligence is crucial when engaging with investors. Beware of toxic investors whose negative reputation can hinder progress and future funding rounds.
7. Angel investors are often involved in early fundraising, but as the project scales, engaging institutional investors becomes necessary for their industry expertise and continued growth.

Crypto fundraising offers a dynamic and evolving landscape for blockchain and crypto projects to secure funding. Despite the ongoing crypto winter, various methods like ICOs, STOs, and IDOs empower projects to raise capital and propel their ventures forward.

Emerging trends like DeFi fundraising, NFT integration, and cross-chain interoperability are shaping the future of crypto fundraising. As the industry matures, regulatory compliance and security remain paramount for fostering trust among investors.

This guide has explored the prominent crypto fundraising methods and provided valuable insights for strategic investor targeting. By effectively leveraging these strategies, crypto projects can navigate the fundraising landscape and secure the resources necessary to achieve long-term success.

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• Digital PR: We craft compelling stories that get noticed by the right investors and influencers.
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