Web3 fundraising refers to the process of raising capital or resources for a cause, project, or business venture using decentralized technologies and platforms built on top of Web3 or the decentralized internet. Web3 is a vision for a more open, decentralized, and user-centric web, often associated with blockchain, distributed ledger technology (DLT), and peer-to-peer networks.
In the context of fundraising, Web3 enables new ways of raising capital that were not possible in the traditional Web2 environment, such as:
Non-Fungible Tokens (NFTs): Unique digital assets, often representing digital art or collectibles, that can be used for fundraising by giving away or selling these assets to interested parties. End-user value usually comes from the experiences or rewards that these NFTs unlock and as a key to a private community.
Initial Coin Offerings (ICOs): A form of crowdfunding where a project or company issues its own cryptocurrency or tokens in exchange for capital. Highly speculative, as token values can range widely, depending on supply and demand.
Security Token Offerings (STOs): Similar to ICOs, but with a focus on regulatory compliance, STOs involve the issuance of security tokens that represent digital shares or assets, often backed by real-world assets or equity.
Decentralized Finance (DeFi): DeFi platforms offer various financial services such as lending, borrowing, and trading in a decentralized manner, often enabling projects to raise funds through liquidity pools, yield farming, and other innovative mechanisms.
Initial DEX Offerings (IDOs): A form of fundraising where projects launch their tokens on decentralized exchanges (DEXs) instead of centralized platforms, allowing for a more open and decentralized distribution of tokens.
For the purpose of this article, we will focus on the first bullet point, fundraising via NFTs. We will discuss five rules to consider when putting together your next Web3 fundraising campaign using NFTs.
Rule 1: Relate NFTs to your cause or project
When launching your fundraiser, you want to give away or offer NFTs to donors. NFTs are typically digital art or collectibles. Consider themes that resonate with the impact donors are making. Is it helping you hire initial staff or provide specific materials or items to a group in need? Tie your NFT images to this impact. The NFTs can reflect the number of people helped by the donation or the percentage of the project it will help complete.
Collaborating with artists to create the NFTs is another often-used strategy. Partnering with a designer who understands and cares about your cause or project can go a long way. Explain your objectives and enlist their help in designing NFTs that convey the impact while being artistically appealing so users would want to collect them.
Finally, many NFTs started as square profile pictures (referred to as PFP NFTs). Consider using an avatar or image in your NFT that donors can use as their profile picture. Another theme to follow could be visuals similar to trading cards. If you're offering multiple NFTs, consider emulating the visuals of popular collectibles such as Pokémon cards or baseball cards.
Rule 2: Offer users choice to match their identity
According to research by global management consulting firm McKinsey, Generation X consumes to show social status, millennials (born 1981 to 1996) consume for experience, and Generation Z (born 1997 to 2013) consumes for uniqueness. When planning your fundraising experience, ensure your NFTs help donors foster a sense of community while also feeling unique.
One way to customize the donor experience is by offering various NFTs in your campaign. Let donors choose the NFT that best suits their preference. You can do this by creating donation tiers based on impact and offering different NFTs with each tier. Another way to do this is by offering a choice of various NFTs to users. Customize each NFT to various aspects of your cause that different donor segments care about. Have each NFT targeted to a different donor population so it reflects their identity and interest in your cause.
While allowing for different preferences by letting them choose the NFT they receive, you still want to build a sense of common community between your donors. We'll discuss that in our third rule.
Rule 3: Build community via NFT-gated experiences
NFTs are great because they can be used to unlock creative experiences and rewards. To provide real value via your NFTs, consider the types of low-cost rewards you can offer your donor base that they find valuable.
Connecting with other like-minded individuals is an easy one, so consider using platforms like Discord, which allow you to gate channels and entire servers to your NFT holders. Then moderate your Discord to encourage conversation and community building. Once you have this closed network built, providing updates on your project or cause is another easy thing you can do. And once your project or cause launches, use this venue to get feedback or requests for enhancements.
Other gated experiences you can build are exclusive access to organizational events, meetings with leadership, influencers or celebrity donors, discounts on swag or content. The opportunities are endless, but what's key is offering your donors a way to get more involved with your cause or project that isn't available to the rest of the public. Ideally, you can use these exclusive experiences to not only build a closer relationship with them but also allow them to build a closer relationship with other donors.
Rule 4: Limit Campaign Length
It might be tempting to keep your fundraiser open indefinitely, but limiting the actual length of your fundraiser can be much more valuable. Here are a few reasons why.
Increased marketing push: When donors know that there's a limited time to raise funds, they're more likely to share with their friends and help you reach your fundraising goal. If it's a perpetual fundraiser, this push to hit the goal isn't really there.
Limit effort: Fundraising takes time. If you're indefinitely fundraising for a campaign, that means you're taking away time from other more valuable activities such as actually using the funds to build your project or manage your cause. Having a set end date also gives you the ability to say that your NFT-gated experiences will start after a set time. So you can time-box the fundraising period and also time-box the period when you're offering NFT-gated rewards. Otherwise, you could find yourself perpetually fundraising and perpetually offering rewards to your donors, which can be time-intensive.
NFT scarcity: Another great thing about NFTs is they can be sold, transferred, and bought. So if your donor wants to sell the benefits that your NFT provides to someone else, they can via NFT marketplaces. If donors can only collect a given NFT for a certain amount of time when the campaign is open, then the NFTs can potentially have much more value. Try to have each NFT fundraising campaign feature different NFTs with different rewards.
Rule 5: Collaborate with influencers or partners early
Just like any fundraising campaign, planning how you will market it and reach donors should be done before the campaign starts. NFTs are real collectibles you can use to partner with potential key stakeholders or influencers. Run your reward and NFT designs by these partners to get their feedback or even create dedicated NFTs co-branded with these partners. Then use your partners to help you further push your fundraiser with new audiences that you normally couldn't reach.
We hope these five rules will help make your next Web3 fundraising campaign a success. We’d love to work with you if you have a project or cause that you want to raise funds for via an Web3 NFT campaign. We help you create and manage the NFTs, create your fundraising page, manage payments and enable NFT gated experiences. You can learn more about our NFT fundraising platform here or start your NFT fundraiser here.