When looking for ways to fund a business, the two most accepted routes are straight from your own pocket (bootstrapping) or looking for an Angel investor. However, that’s not the only way to raise capital. We’re going to look at some more innovative funding methods, including one case study that shows how a little ingenuity can bring about big results.
All of the best ideas start with an inspiring story and this one about blockchain in sports industry goes to show how quickly success can happen with a great idea. FC Barcelona needed a cash injection but didn’t have players that they were willing to trade. So, they turned to their fans. The team offered fans the chance to buy one of 600,000 non-fungible tokens, each with its own clip from the team’s long and celebrated history. The tokens were priced at two euros each and all of them were snapped up within 20 minutes of going on sale! They’d raise 1.2 million euros with this idea, given fans something truly special, and managed it all in 20 minutes.
I’m not suggesting that your business has quite the reach that one of the world’s premier football teams does, but it pays to be innovative. With that in mind, let’s look at some funding ideas that you could implement in your own business.
Crowdfunding
In essence, what FC Barcelona did was crowdfunding. They knew that people believed in their product (in this case a football team) and they asked them to put their money where their mouths were. The football club had the asset of hours and hours of footballing moments, which they could digitize and put into NFTs. You just need to think of how you’re going to get your message out there, and how you’re going to reward customers for voting with their wallets.
To deal with problem a, how to get the message out, using a well-known platform is a wonderful place to start. Kickstarter allows people to browse through all kinds of crowdfunding campaigns, filtered into categories. This is a straightforward way to potentially present yourself to those who will want to support you. For how to reward customers, it’s going to be much more unique to your business. Brand new companies often use their first round of products as a reward for the people that support them. For example, a group might be crowdfunding to start up a publishing company. The people who support them initially are given limited edition copies of their first round of books.
Utilizing NFTs
The crowdfunding example above uses physical items to reward customers for pledging their donations. However, you could also use NFTs. These aren’t physical items, but they do have intrinsic value, so for the people who understand them—and take an interest in the world of blockchain—these can be valuable assets.
Naturally, some businesses will have models that make more sense with NFTs than others. Some companies are based entirely in the blockchain realm. Heading back to the footballing world, Sorare is a fantasy football game, where players manage a virtual team of footballers, buying, selling, and trading them within the game. All these players are, you guessed it, NFTs. In order to secure the funding that they needed in the early stages of the game, Sorare invited players to invest in exchange for exclusive cards. These cards did all kinds of things, from enhancing footballer stats, to simply being rare assets in and of themselves. Holders might receive access to new features ahead of others, allowing them to get a head start in the inner workings of the game. The scarcity of them meant that if the game succeeded, players would have an asset that should increase in value.
Take a moment to think about the company you’re starting. If it’s in the digital space, then it’s possible that you might be able to take a leaf out of Sorare’s book and raise money by trading NFTs for cash investments.
The Benefits and Drawbacks of NFT Investing
While the two examples that I’ve shown you suggest that trading NFTs for investment is a failsafe strategy, every method has its own unique benefits and drawbacks. If you’re seriously considering using NFTs as a way to gain funding, then consider the following points.
NFTs can be a uniquely effective way to build a community around your business. The collecting and trading of NFTs allows your customers to feel that they are truly part of your company. Those who feel connected to a business are more likely to tell their friends about it.
On the other hand, NFTs will likely attract a fairly niche market. As the legal framework around NFTs is still evolving, and the public’s understanding of them too, it’s possible you’d attract a larger pool of investors using more traditional means.
short url:
