The best Web3 teams can still attract capital, says investor Santos

“A lot of teams come to me and say, ‘Hey, we’re going to raise another five, 10 million because we want to hire a head of marketing,’ and I’m like…you don’t even have a product,” Santos says


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“It’s a tough fundraising environment out there,” says Santiago Santos. But he insists that the “good companies are still getting access to capital.”

Fundraising rounds in Web3 are still happening, the angel investor says, but they’re “very concentrated” and “selective” in the current market conditions.

On the Empire podcast (Spotify/Apple), Santos says he is shocked to see “how some teams are just able to blow through $15, 30 million in one year.”

“They just threw bodies at problems,” he says.

Santos says he often sees companies operating with the wrong priorities. “A lot of teams come to me and say, ‘Hey, we’re going to raise another five, 10 million because we want to hire a head of marketing,’ and I’m like…you don’t even have a product.”

“Why don’t you just double down on the product?” he says. 

Read more: Crypto funding: A $50M week for encryption cryptography, NFT memberships

Identify a niche and go after it

The good teams, Santos says, are very technical and run “lean,” with founders who are “very competent.”

“I just got a demo from one of the teams that I was an investor in and they’ve just been incredibly lean,” he says. “They’re very technical,” he says. “It’s just a very skeleton organization, just bare bones, just building the product.”

“They’ve identified a niche in the market and they’re going after it,” he says. “Those are the teams that are getting funded.”

Unfortunately, Santos says, the majority of teams are bloated organizations carrying high executive staff costs while spending excessively by “going to all these conferences.” 

“Hold on here,” he says. “Build a product. Find product market fit.”

Yanowitz adds that a number of “later stage companies” like Chainalysis, Ledger and Yuga Labs are also facing layoffs. “They need big capital. They’re raising maybe series B, series C, series D.”

“VCs are saying, ‘Look, I actually like your company, but your burn is too high, so you need to first cut your burn, then we’ll allocate,’” he explains. 

Read more: Billionaire-backed Hong Kong crypto VC pours $100M into blockchain fund

Yanowitz expects that many Web3 companies are not announcing their raises right now due to poor market conditions. If a company is down 66% from their last raise, he says as an example, “there’s no way you’re announcing a big down round.” 

“You do everything in your power to keep that fundraise quiet.”

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