Source: Cointelegraph Original: "{title}"

Key Points

The Web3 fundraising landscape has changed dramatically; investors now demand robust business models, clear token economics, and market validation.

Remember, the injection of "smart money" is crucial; in addition to funding, strategic investors often bring guidance and industry connections.

There are various funding options—VCs, angel investors, grants, ICOs, and crowdfunding each have their advantages.

You must know when to pivot—if attraction is low and resources are depleted, reassess or shift to new opportunities.

If you were involved in cryptocurrency back in 2017, you might remember Centra Tech, a Miami-based company that conducted an ICO. The company claimed to offer a cryptocurrency-based debit card supported by major payment networks like Visa and Mastercard—but in reality, it had no operational product.

Despite being in the "idea" stage, Centra Tech raised over $32 million in its ICO and even garnered endorsements from celebrities like Floyd Mayweather Jr. and DJ Khaled.

Less than a year later, its founders were arrested. It was later revealed that the company had no actual partnerships with payment networks and no real product.

Centra Tech was just one of many projects that secured investment solely based on a white paper during the "ICO boom," many of which didn't even have an MVP (Minimum Viable Product). Reports from Fabric Ventures and TokenData show that in 2017, 435 successful ICOs raised approximately $5.6 billion, averaging $12.7 million per project.

Shockingly, less than half of these ICOs were still active four months after their token sales ended. A study reported that over 80% of ICO projects in 2017 were identified as scams.

Indeed, the era of easy financing is long gone. By 2025, many startups seeking investment, fueled by past enthusiasm, will face stricter regulatory scrutiny, increasingly cautious investors, fierce competition, and ultimately low success rates.

However, the market is not entirely bleak; there are still investors for projects that truly stand out.

Today, you will learn about the most popular fundraising methods in Web3, from start to finish—even including what to do if you only have a smartphone and a dream.

Additionally, a surprise awaits at the end of the article—an exclusive interview with Cointelegraph's Head of Business Development for the Accelerator, providing valuable insights into the current state of Web3 investment.

1. Incubators and Accelerators

Incubators and accelerators play a crucial role in helping Web3 startups move from idea to market. These programs provide guidance, resources, and funding to support early-stage projects. The distinctions are as follows:

Incubators: Focus on startups in the ideation phase, offering guidance, networking opportunities, and resources to help build an MVP.

Accelerators: Work with startups that already have an MVP, providing funding and guidance to help them scale quickly. Most end with a demo day where projects pitch to investors.

Notable Web3 projects include:

Outlier Ventures Base Camp: A 13-week accelerator program for Web3 and crypto startups.

Alliance: Provides daily guidance and flexible funding for Web3 founders.

Antler: A global early-stage investor offering a 26-week startup program.

Brinc: A 10-week accelerator providing funding, guidance, and a global network.

Of course, Cointelegraph also has its own accelerator program, offering up to $100,000 in "smart money," giving you direct access to infrastructure providers, investors, mentors, foundations, exchanges, market makers, and more.

If you want to apply for a Web3 startup accelerator or incubator, research projects that align with yours, prepare strong pitch materials, and submit your application through official channels.

Each program has its own processes and deadlines, so check the requirements in advance.

2. Venture Capital (VC) Funding

For Web3 startups that require significant funding, VCs are the preferred choice.

Investors are becoming more selective, expecting clear business models, sustainable token economics, and strong legal foundations. Here’s what you need to know.

Finding the Right Web3 VC

Not all VCs are interested in blockchain, so it’s crucial to target firms that focus on Web3.

Look for investors who have supported similar projects and have a good track record in cryptocurrency, DeFi, or NFTs. Resources like Alchemy's Web3 VC list can help you identify suitable participants.

When reaching out, ensure your pitch highlights what makes your project unique. VCs receive hundreds of applications, so you need to stand out—whether through innovative use cases, strong traction, or an outstanding team.

Structuring VC Deals

Web3 financing often involves a mix of equity and token allocation.

Investors may hold equity in your company while also receiving a portion of tokens that may appreciate over time. Key points to negotiate include:

The best deals align the interests of founders and investors. A poor structure could mean losing control over the project.

Due Diligence: VC Expectations

Before signing an agreement, investors will conduct due diligence—an in-depth look at your project's financial, legal status, and business model. Be prepared with the following:

Legal Documents: Company registration, contracts, and compliance with regulations.

Did you know? Scammers posing as VCs exploit startups' desire for funding through deceptive means to steal funds or sensitive information. Always stay vigilant!

3. Angel Investors

Angel investors—high-net-worth individuals investing their own funds—can provide more flexible early-stage funding than VCs. However, securing angel investment is not just about the numbers; it’s about finding people who genuinely believe in your vision.

If you are developing a Bitcoin Layer 2 solution, your best bet is not a general tech investor; rather, it’s a Bitcoin whale who wants to see the network expand. When investors have a personal stake in the project's success (whether ideologically or financially), they are more likely to support it.

So, where can you find these individuals?

Conferences.

Events like Token2049, ETHDenver, and Consensus are filled with angel investors looking for the next opportunity.

Cointelegraph randomly interviewed attendees at Token2049, and nearly all had money to invest.

In addition to conferences, Web3 X, Telegram, and private investor groups are great places to build relationships. A warm introduction can be the difference between getting a meeting and being overlooked.

Angel investors can be some of the most supportive backers in Web3. You just need to be in the right place, with the right pitch, at the right time.

4. Grants and Ecosystem Funds

Many blockchain platforms have established grant programs to support projects that enhance their networks.

Essentially, "If you build a project on our blockchain, we will support you!"

For example, Rootstock grants $2.5 million quarterly to developers building on the Bitcoin blockchain. Similarly, the Starknet Seed Grant program provides non-dilutive funding to early teams with an MVP planning to go to market.

To increase your chances of receiving funding:

Refer to the Rootstock grant application guide for detailed insights into eligibility and evaluation criteria.

Did you know? The integration of Arbitrum with the Rakuten Group is still in the planning stages, as Ethereum's largest Layer 2 network explores deeper ties with the South Korean conglomerate. This may indicate a renewed interest from traditional companies in the blockchain-based virtual world.

5. ICOs and Token Sales

Believe it or not, Initial Coin Offerings (ICOs) and token sales remain popular methods for blockchain-based projects to raise funds.

ICOs involve creating and distributing new cryptocurrency tokens, which investors purchase using established cryptocurrencies like Bitcoin or Ethereum.

These tokens may grant holders access to specific services, voting rights, or a share of the project's potential profits. The ICO process typically includes:

Remember, in many regions, tokens offered in ICOs are considered securities and are subject to specific legal requirements. For example, the U.S. Securities and Exchange Commission (SEC) states that many ICOs involve securities offerings and must comply with federal securities laws.

Non-compliance can lead to legal action, financial penalties, and damage to the project's reputation. Therefore, consulting legal experts to ensure compliance with all applicable laws and regulations is crucial.

To increase the likelihood of ICO success:

By carefully planning and adhering to regulatory guidelines, projects can leverage ICOs and token sales to raise funds and cultivate a loyal user base.

Did you know? Influencers can be part of your ICO fundraising strategy, receiving tokens directly to promote your project. This approach is sometimes referred to as the "influencer wheel."

6. Crowdfunding

If you are in the ideation phase and lack funding, self-funding development costs to build an MVP can be very challenging.

Additionally, you may not have the connections to angel investors or the funds and time to attend investor events.

This is indeed a tough situation, especially when you’ve spent months sending cold messages to potential investors on LinkedIn with no response.

Therefore, to avoid losing half of our readers' train of thought, we introduce Web3 crowdfunding as a way to bridge the gap. While it may not solve all problems, it can help cover some MVP development costs.

Traditional crowdfunding platforms like Kickstarter and GoFundMe are centralized and do not integrate with blockchain-based fundraising models, making them unsuitable for Web3 projects. Instead, Web3 startups often turn to projects like Gitcoin Grants—crowdfunding for public goods and open-source blockchain projects.

If you still struggle to secure funding, you might try industry-agnostic platforms like UFANDAO.com.

This platform stands out for its ability to facilitate crypto fundraising for any idea, with donations coming from individuals who resonate with the vision and wish to contribute to the collective well-being of humanity.

While it may not help you raise hundreds of thousands of dollars, it could be the push needed to get your paper airplane off the ground.

UFANDAO offers:

This "universal card" for those with only a smartphone and a dream is now yours.

You say this article is comprehensive!

Anna Shakola Interview: The State of Web3 Fundraising in 2025

As part of this research, we spoke with Anna Shakola, Head of Business Development at Cointelegraph Accelerator, to gain an insider's perspective on the current state of Web3 fundraising.

Here are three key excerpts from the conversation worth sharing with you.

1. What are Web3 investors currently looking for?

The days when a startup could raise tens of millions of dollars solely based on a white paper are over.

The industry has been damaged by poor performance in Web3 portfolios, investments in projects lacking growth, or those that ultimately turned out to be scams.

The industry is expanding, yes, but that also means more startups, higher levels of competition, and a reduced risk tolerance among investors.

Currently, we are looking for infrastructure, B2B, and growth-stage projects that have proven market demand. I think this reflects broader investment preferences.

I want to emphasize that infrastructure is indeed the new Alpha.

2. What advice do you have for Web3 startups in 2025?

Here are some things I suggest focusing on at the outset:

Think about who you are. Be specific, be honest, and remember you don’t need to reinvent the wheel. Identify the problem you are solving. Strong project positioning is crucial.

Look at investors' portfolios. Check out the accelerators, VCs, and angel investors you are reaching out to. Don’t blindly contact everyone—you’re wasting time.

Consider grants and ecosystem funds. These are often overlooked. You can even validate your idea through hackathons or bug bounty programs. This is where investors will pay attention.

Seek "smart money." Simply getting funding from passive angel investors may not be enough. Focus on deals that can provide you with solid, comprehensive support.

3. At what stage should founders give up on raising funds for their projects?

This is an interesting question because most people would typically say never give up.

However, you need to consider the opportunity cost of the time spent contacting VCs, attending events, and redesigning the MVP, as well as the financial implications involved.

I have a list of founders I reach out to every year because they launch new projects whenever trends emerge. Adaptability is important. If something isn’t working, don’t be afraid to let it go.

I think when funds are depleted, the project becomes a financial burden, the team is exhausted and inefficient, and there are no meaningful conversations happening with investors, these are all signs that it may be time to move on.

Remember, in many cases, it’s the VCs who find you—not the other way around.

From ICOs to "smart money": Leading the future of Web3 fundraising

If the numerous double-checks from VCs on Telegram haven’t painted a picture for you, then Web3 fundraising has undergone significant changes since the ICO boom of 2017.

Today, securing investment requires more than just a white paper and some good connections. It demands strong project positioning, a well-structured business model, and the ability to demonstrate real market demand.

Whether you are pursuing VCs, angel investors, grants, token sales, or crowdfunding, understanding the right approach for your stage of development is key.

Most importantly, as Anna mentioned, obtaining "smart money"—investment accompanied by strategic support—can make a huge difference.

If one approach isn’t working, pivot, refine, and keep pushing forward, even if you end up fundraising for your MVP on UFANDAO.

But if the challenges become overwhelming and traction remains elusive, knowing when to move on is just as important as knowing when to persist.

Good luck!

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