2M, implying 10-20% dilution.
The 2017 playbook of raising millions on a whitepaper is over. Serious founders building long-term businesses in web3 don’t start with a token sale. They start with a traditional equity pre-seed round, just like their web2 counterparts.
M isn't just about capital; it's about acquiring the network, credibility, and guidance to find product-market fit. A standard SAFE (Simple Agreement for Future Equity) signals you're focused on building a durable business, not short-term speculation. It forces you to answer the hard questions about users and value before layering on token complexity.
This is the playbook for raising your first
M-
M to build a team and ship a product people actually use.
The Modern Fundraising Instrument: SAFE + Token Warrant
ICOs are dead and SAFTs (Simple Agreements for Future Tokens) are a regulatory headache. Today, the standard for a web3 pre-seed is a SAFE plus a Token Warrant (often called a Token Side Letter).
This hybrid structure gives investors exposure to both the equity of your company and the future potential of your protocol. Here’s how it works:
- The SAFE: This is a standard Y Combinator document. Investors give you cash now in exchange for the right to equity in your company (typically a Delaware C-Corp) in a future priced round.
- The Token Warrant: This is a side letter attached to the SAFE. It grants the investor the right to purchase a proportional amount of your tokens if and when you launch them. This right typically comes at a steep discount (often 20-30%) to the price of the first token sale.
This structure protects investors while giving you maximum flexibility. You can focus on building the core business and delay a token launch until it makes strategic sense—for decentralizing the protocol, incentivizing users, or building a community treasury.
The Math: Setting Your Terms
For a pre-seed round, the numbers usually fall in this range:
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