March 10, 2022

Attaining Crowdfunding For Your Business Through NFTs

Attaining Crowdfunding For Your Business Through NFTs

Is it possible to crowdfund using NFTs?

Generative Avatar Projects led the NFT space in 2021 with numerous hugely successful projects. Collections such as CryptoPunks, Bored Ape Yacht Club (BAYC), and Doodles are some of the all-time best-selling NFT projects. Others tried to emulate these projects, with many enjoying a modicum of success.

As time passes, avatar-led undertakings have less impact, but the versatile nature of NFTs ensures other types of campaigns become the trend. 

How Are Crowdfunding And NFTs Connected?

Crowdfunding has become a means to raise capital in the Internet era. It's an alternative way to raise money for businesses away from sources such as borrowing from the bank, business grants, and angel investors. Crowdfunding involves the business person proposing the idea, a group of people willing to invest, and a platform bringing the two parties together to execute the concept.

NFTs have the features to replace crowdfunding and become a better method to raise capital. It eliminates platforms performing the middle man mediator role. With NFTs, there are only two sources involved: the business proposing the idea and the investors willing to buy the NFTs to raise the money required. 

The Changing Nature of NFTs

While NFTs projects evolve from avatars, one part will remain constant. All projects require loyal and committed fans to succeed; the community element continues to be necessary. It's likely projects will evolve to where utility is the main focus and art becomes negligible. In this raising capital example, the business becomes the utility.

Raising Funds Through NFTs

Anyone wishing to start a business could do so through an NFT community, the funding step becomes less difficult. Many lending institutions require people to jump through hoops before offering the finance. Becoming accepted on crowdfunding platforms is no easy task; arduous tests are in place like traditional institutions. 

The Internet has made it easy to build a following. Anyone wanting to start an NFT project can post on Social Media platforms such as Twitter and build a community on Discord. A big enough community with trust in the assignment will lead to the sell-out of the project. 

The Problem With Avatar Based NFTs

The novelty factor of NFTs meant early projects with artwork could succeed. The legendary Cryptopunks project continues to be the number 1 project purely based on art. But there is only so much demand for art; the chance of the investment increasing in price diminishes as more JPG artwork enters the blockchain ecosystem. 

This led to projects seeking to offer metaverse experiences and play-to-earn games utilities. But unfortunately, for the majority of projects, the utility is not ready upon launch. The road maps typically state the project will evolve to offer utilities some months after the launch.

With no firm guarantees, it leads to a lack of confidence from investors. The numerous cash grabs and rug pull further add fuel to the problem. 

How Can A Business Raise Funds Through NFTs? 

Building a solid community on Social Media and Discord and communicating the intentions will gain the investors' trust. Having concrete business plans helps the situation. Various plans can be proposed and implemented to reward investors. Investors could gain a percentage of the profits from the business; all paid through the NFTs. Allocation of discounts is possible for holders.

The smart contract feature of NFTs allows agreements to be programmed with no need for third-party involvement. The holders could even become part of the organization's governance through a decentralized autonomous organization (DAO) setup. 

Why Such A Setup Is An Improvement On Avatar Based NFT Projects?

NFTs are an extension of cryptos, and people buy for investment purposes. Purchases are made in the hope of price increases. Very few invest in NFTs for the love of art and a carefree attitude towards the price. In a business NFT scenario, the utility is the main focal point. The project will need to deliver the utility upon launch. The utility could be up and running on a small scale and the money raised through NFTs allows expansion to occur. 

In this situation, for success, a detailed plan needs to be laid out clearly for the investors to study and analyze. Unlike avatar NFTs, there is no vague notion of a utility launching in the future. This has great use for businesses already in existence. They can raise cash for further expansion. Given the company already enjoys success, it will provide confidence to the investors. 

This kind of scenario will lead to more people taking NFTs seriously. The cartoon avatar nature of NFT often only appeals to young people and teenagers.


NFTs have many uses in the commercial marketplace, and a way to raise capital is one example of utilizing NFTs. It will also provide more investment opportunities for the investors to develop their scope. With time, many businesses will use NFTs in many different capacities.