How to Pitch Your Pre-Seed Web3 Startup

I recently did a presentation for the Bitcoin Startup Lab about how Web3 founders should pitch to investors when raising a pre-seed round. I’ve summarized my presentation in this blog post, but you can view the video at the end of this article.

I talk about the mindset of pre-seed investors, the things we like to see highlighted in a pitch deck, what to prioritize, and more.

Keep in mind that this is my personal view of how I assess pre-seed startups, and may not represent my colleagues at Deep Ventures or other early-stage investors.

Let’s dig in.

The Mindset of Pre-Seed Investors

Of all the institutional investors, pre-seed VCs take the most risk.

We invest in the earliest stages, where there is little to no data and very few signals to tell us whether the startup will be successful.

So we like to see some early hints, as subjective as they may be, that help de-risk the risk that we’re taking.

What Should Be Included in a Pitch Deck?

Before we dig into the the specific aspects of a pre-seed pitch that pops for us, let’s first review what information should be included in a pitch deck.

• Cover slide / overview - tagline of what you’re building

• Problem - the problem you’re solving

• Solution - your unique solution to the problem

• Team - who you are and why you’re awesome

• Why Now? - why is now the right time for your startup?

• Traction - the progress you’ve made

• Market Size - how many customers and how much money you can make if you won the entire market

• Business Model - how will you make money and be viable?

• Go-To-Market (GTM) - who are your customers and how will you reach them?

• Competition - the companies who stand between you and total market domination

• Tokenomics - how your token works within your ecosystem, and how the supply will be allocated and distributed

• Roadmap - the timeline of product development

• The Ask - how much money you’re raising and at what valuation

• Use of Funds - how you will use the funds you raise

Each of these slides are important, but we’re not going to review what goes into each and every one of them. There are a plethora of articles that do this - for starters, see here, here, and here.

Rather, we are going to focus on what jumps out at us when we assess pre-seed Web3 startups:

1. Traction and validation

2. Founder fit

3. Understanding of go-to-market (GTM)

Traction and Validation

If you have any kind of traction, shout that from the rooftops!

You might be saying to yourself, "Whoa whoa whoa Mike, I'm only at pre-seed, I don't even have a product, how can I have traction?"

The reason why traction stands out to us is because most pre-seed startups don’t have it.

Most pre-seed startups are just a twinkle in the founders’ eyes - a pitch deck, landing page, maybe a whitepaper. No product and hence no real user traction.

So what might traction or validation look like at pre-seed?

1. It could be a waitlist of users or devs (whomever is your target audience is), or an engaged community on Twitter, Discord, or Telegram.

2. Letters of Intent from launch partners.

3. If you’re building in DeFi, it could be liquidity commitments.

Traction can be anything that shows there is a high level of interest from users and partners, and that what you’re building is solving a problem and adding value.

If you’ve validated your concept, or built a simple product that proves in some way that you’re on to something that people want, this goes a long way in de-risking for investors.

There’s no doubt that the pre-seed stage is primarily going to be about building your product. But you definitely should be thinking about validating your concept in the very early stages of your company.

You’re taking on more risk than we are - you’re dedicating your days, nights, and weekends to your startup. There’s stress, anxiety, and fear. De-risking and validating is in your best interests, not just ours!

Founder Fit

If you don’t have traction at pre-seed - which most of you probably don’t - it’s all about the narrative and vision, and why you’re the best team to achieve this vision - aka founder fit.

For example, let’s take a look at this guy, whom you may be familiar with.

Let’s break down Vitalik Buterin’s story of why he started Ethereum:

1. He quit playing World of Warcraft because his warlock’s Siphon Life spell was taken away from him.

2. This ignited his mission against centralized services. Blizzard Entertainment (the maker of World of Warcraft) screwed him over royally. Now the man is on a mission to decentralize the world.

3. That brought him to Bitcoin, and he fell in love with it. He co-founded Bitcoin Magazine.

4. Vitalik had a technical background (he was a Computer Science major from University of Waterloo), necessary to build such a complex product.

5. He drops out of college to pursue his mission - true dedication.

6. He was a Thiel Fellow as well.

This evidence makes it clear that he has the drive, skills, knowledge, and experience to build Ethereum. Vitalik checks all the boxes for founder fit.

Now think about your story and ask yourself these questions:

• Why are you working on this problem?

• What was that moment of reckoning that led you to start solving the problem that you’re solving and building what you’re building?

• Why do your experience and skills make you the best team to solve this problem?

When you can tell that story clearly and concisely, and it’s believable and engaging, it’s like magic. It inspires investors to jump on board and help you achieve your mission.

I mentioned traction first, because that’s the rarest thing to see. But clear founder fit is the most important signal at these early stages.

Understanding of Go-to-Market (GTM)

I think a lot of teams gloss over GTM in their decks, which is why it stands out to us when teams have unique insight into their customers and how to acquire them.

Don’t get me wrong - you have to have good tech and product. But we know that the best tech doesn’t always win. We love technical founders but you have understand the importance of GTM and growth.

And many Web3 products will eventually be open-sourced, so tech and intellectual property can’t be your competitive moat. Your strongest and maybe your only moat is going to be your community of customers, users, and supporters.

That’s why a deep understanding of who your target audiences are and how best to reach them, now and over time, is so important.

You also want to communicate that you have experience working with these target customers (founder fit, anyone?)

In my presentation, we performed an example exercise about a founder building a DeFi lending platform on Stacks for companies to access loans permissionlessly. We talked about mapping out detailed target markets and how to reach them. You can check out that dialogue here.

A lot of pitches that we see provide a surface level understanding of their customer. The ones that show a deeper understanding of their target audiences gives us a stronger signal that they can achieve the distribution needed to win their market.

Conclusion

There are a lot of factors we consider when assessing a pre-seed Web3 startup, and we take all of it into account.

But in our eyes the three aspects of a pitch that are the differentiators are:

1. Traction and validation - it’s so rare

2. Founder fit - an engaging, cohesive, inspiring story

3. Understanding of GTM - a deep understanding of your customers and how you’ll access them

A pitch deck should reflect the work you’re doing and the progress you’re making everyday. So all of this is intertwined.

1. Your devs are building product. But who are you building product for, and to solve what problem?

2. You need to identify and talk with your customers to learn about these problems.

3. How do you find these customers? Do you have existing networks of these customers (founder fit)?

4. And these customers may become future users, which is real traction.

All of this works together in a hopefully nice, cohesive story that you can tell to investors when you pitch. If it’s done well, then you get that 💰.

Below is the video of my talk. Let me know what you think! Thanks for reading and viewing.