The NFT market may be down from its 2021 peak, but founders, builders, and collectors are still flooding the space. And many are looking for fresh capital.
Even though NFTs are part of the web3 world, traditional trading mechanics are unavoidable for founders in the post-boom market.
An eclectic group of non-venture capitalists gathered at NFT NYC last week for a panel on how to get funding for your NFT project. Speakers agreed that, as with any project, at the very least, it’s important to have the details tight and aligned before seeking investors.
“We see a lot of companies looking to get investment and they want to do it right away,” said Emily Cheshire, segment lead for Aprio Cloud’s blockchain and cryptocurrency team. “I would say you need to plan for it from day one and do everything you can to prepare for that investment.”
Most NFT projects have vague predictions, roadmaps and ideas for their business models, said Ralph Kuepper, founder of Sherwood Analytics. “Very rarely do you see a business plan with predictions and ideas” for NFT projects.
Cheshire noted that by the time many NFT projects seek investment, it is “almost too late.” Planning includes knowing who the advisers are, who the core team will include, as well as simple things like understanding financials and forecasts.
“Building on this space and building an NFT business is sexy and fun, I don’t blame you. I would like to build that throughout the day, but you also need the fundamentals,” Cheshire said.
It is also important to observe what and as investors are investing, Kuepper said. There is a noticeable difference between companies buying NFTs, possibly for a PR stunt like Visa did later buy a CryptoPunk for about $150,000 worth of ether in 2021, and invest in building a project.