I’m Nelson, a second-time founder who got his start through digital marketing, which I’ve been doing for the best part of 15 years. My first startup was called Avenue. 

It was a web3 project focused on making it easier to collaborate in the crypto ecosystem, where many participants work across multiple jobs and projects. 

We raised a $1M pre-seed and built a great product and team that attracted users.

We weren’t in a strong position to raise a seed round when the crypto VC market crashed, so we had to close the company.

I’ve led one successful raise and one failed raise — I’ve seen both sides of the coin. These days, I’m a co-founder at MKR Club. 

We raised a pre-seed of $1M (and turned down a lot more), and built a great product and team that attracted users. 

We weren’t in a strong enough position to raise a seed round a year later when the crypto VC market crashed and we had to close the company.

We wrote down what our key hires would be, and when we would aim to make them.

We calculated a salary range for those positions, and calculated how much we would need to survive for 12-18 months. 

We added a few extra grand per month for marketing, software costs, travel to conferences etc, as well.

We raised $1M and turned down more (between $500k-750k) because one particular investor didn’t seem to be a good fit for us, based on what we’d heard about their reputation. 

In hindsight, given the market crash, people may say we should’ve taken the money. But, at the time it felt like we should trust our gut and our ethics. 

It also felt like we were doing the financially responsible thing by keeping the company smaller and taking less money.

If there was no ethical problem, I would tell the old me that when someone offers you money and you don’t have to sacrifice too much of the company to get it, you should take the money.

For our seed round, it was two things: 1. Running out of money, and 2. Getting signs of traction that meant we’d need to scale up and make more hires.

Unfortunately for us, the web3 market was bad and had been bad for almost a year, and showed no signs of getting better anytime soon. 

Founders in crypto are having a tough time of it at the moment — web3 investments are down roughly 98% since last year, which is unbelievably bad.

For our successful pre-seed raise with Avenue, we relied on a mix of intros and cold DMs. 

As Avenue was a web3 company, and most crypto people hang out on Twitter, we concentrated on Twitter DMs for contact. 

We’ve found that intros are the best way to make contacts, so I’d recommend exhausting these before you resort to cold DMs. If you have the time, I’d do both.

For our pre-seed raise, we reached out to about 100 firms. For our unsuccessful seed raise, we messaged many times and got nowhere. 

When the market is that bad, the conversion rate from your messages and meetings will be drastically lower, so you’ll need to make up for that with volume. Even then it might not be enough.

For intros and cold DMs, we included the following info:

One of the big mistakes we made for our pre-seed round was shooting our important bullets too early.

We were so excited that we were able to get meetings with the top firms like a16z, that we didn’t stop to think whether or not we should.

We should have waited until we had more practice, had refined our pitch, and had gotten other commitments in place before approaching them. 

Make sure you’re at the top of your game and have your sales pitch down before you reach out to the firms you really want on your cap table. 

For our seed round, many investors were refreshingly blunt (often, many VCs don’t want to give honest feedback, because the incentives reward them for saying no in a nice way, rather than a helpful one.) 

We had multiple smaller firms saying that with the market being so rough, they would invest, but only if we could secure a lead who would set the terms and valuation. 

We didn’t expect them to be this forward, but it helped a lot, as we knew where we stood.

Investors who said ‘no’ to our seed round had 3 main reasons. 

We had several teams using our product on a daily basis, were onboarding organizations each week, and had more than 170 organizations on our waitlist. 

Traction means different things to one people versus another, and while our traction was great for the state web3 was in, it wasn’t great compared to other industries that VCs were more bullish on such as AI. 

We were a growing fish in a shrinking pond. VCs are looking for returns and for the most part, they’ll go where they’re most likely to get them. 

While we weren’t monetizing at that point, it was in our best interest not to charge users at because our product relied on network effects and growing large. 

It’s a legitimate concern from a VC’s perspective as a product that’s currently charging users has shown that they’re willing to pay, which we hadn’t done. 

Many firms have chosen to sit out many investments recently, preferring to enter the cap table later and pay a premium for an investment that they consider to be lower-risk. 

If you’re in a bad market, the odds are stacked against you. Part of succeeding as a startup is timing, and that can be hard to accept, as it’s largely out of a founder’s control.

Start early. Make friends with other founders and people in the ecosystem, because many of your intros will come from them, and intros are the best tool you have. 

Your deck will go through so many iterations that it will drive you crazy. 

Don’t bother designing it until you’ve reworked the copywriting many times over and given it to other founders and friendly VCs to get feedback.

You need to balance refining the narrative with getting something done. It’s easy to get to draft 50 of the deck without sending it out. 

At some point you’re just going to have to say it’s good enough and get it out there. After each relevant reply or meeting, take a look at the deck and see if you can tweak it.