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Before the Pitch Deck: How Web3 Founders on ICP Can Avoid Costly Funding Mistakes

May 3, 2025

Before the Pitch Deck: How Web3 Founders on ICP Can Avoid Costly Funding Mistakes

Founders in the Web3 space have been seen to often equate innovation with funding. But getting capital is more than just flashy pitch decks and demo days. It's about understanding what your business truly needs, aligning funding with growth, and structuring your startup legally and financially for the long haul.

This is especially critical for developers building on the Internet Computer Protocol (ICP), where the potential is vast—but so are the pitfalls.

Let’s take a step back and ask: Are you funding-ready or simply in love with the idea of being funded?

Timing is Everything in Web3 Funding

One of the most common mistakes in the startup world, both Web2 and Web3, is raising funds too early or too late. On ICP, where devs have access to cost-effective infrastructure and can ship MVPs faster using canisters, there's even more reason to hold off on fundraising until you have real traction. Think of funding not as a lifeline, but as fuel for a journey you've already started.

ICP Action Tip:

Before raising, use the ICP ecosystem to validate your product. Leverage tools like Distrikt or OpenChat to run user tests, gather feedback, and track organic growth—this can significantly increase investor confidence.


Not All Capital is Created Equal

Web3 founders often dream of VC money without understanding the fine print. Traditional VC terms may not align with decentralized models. On ICP, where ownership and governance can be distributed through DAOs or tokenomics, you need funding models that don’t erode your autonomy or decentralization goals.

Explore options like:

  • Revenue-based financing is available if you're running a dApp with cash flow.
  • Grants from blockchain ecosystems (ICP offers them through the DFINITY Foundation).
  • Community fundraising using token sales or DAO contributions, with proper legal backing.

ICP Action Tip:

Build a sustainable plan first. Investors (even in Web3) are drawn to traction, not just tokenomics.

What Web3 Investors Want

Even with the promise of decentralization, investors still look for structure: a clear cap table, working product, legal compliance, and founder commitment. In the ICP space, that means your canister architecture should be well-documented, your tokenomics defensible, and your legal structures compliant with evolving Web3 regulations.

ICP Action Tip:

Use the ICP Ledger and Governance tools to build transparency into your product. This reassures investors who want proof of usage, accountability, and clear ownership.

Get Your Legal Stack Right

Before any serious funding conversation, ensure you’ve got your legal foundation in place. This includes:

  • A clear founder vesting agreement (so your co-founder doesn't walk away with 30% ownership)
  • A cap table that includes DAO, treasury, or community allocations
  • Well-drafted documents for SAFEs, convertible notes, or token warrants

The ICP ecosystem gives you the technical foundation, but don’t ignore your legal one.

ICP Action Tip

Use ICP’s Chain-Key cryptography to ensure on-chain agreements are verifiable. Then back that up with off-chain legal counsel who understands crypto.

Don’t Let Terms Trap You

Anti-dilution clauses, hidden control rights, or unfair liquidation preferences can destroy your vision, even if your protocol succeeds. Web3 startups must balance capital with community. Accepting VC money at the cost of your DAO's voting power may alienate your most loyal supporters.

ICP Action Tip:

Learn the art of negotiating Web3-friendly term sheets. Engage investors who understand decentralized governance, or better yet, design your token economics to self-sustain initial growth.

Grants, Not Just VCs

Remember: ICP offers grant programs that support early-stage projects with no strings attached. These can cover development costs, marketing, or ecosystem integrations. Accelerators like the DFINITY Developer Grant or community DAO grants can take you far before you even talk equity.

ICP Action Tip:

Apply for the DFINITY Developer Grant and use it to build a proof of concept. It’s easier to attract aligned investors when you have something live, tested, and community-backed.

Conclusion

Funding is not the goal, impact is. As a developer building on the Internet Computer, you're already working on the infrastructure of the future. The challenge now is to structure your startup smartly, fund it wisely, and grow it sustainably.

Because in Web3, the biggest win isn’t just getting funded—it’s keeping control of what you’ve built.


Article By: Mana Lamja