How we closed our $500k pre-seed round

Learn about the journey of closing our $500K pre-seed round, the challenges faced, and the strategies employed to secure early-stage funding.

We’re excited to announce that Blockdaemon just closed a $500k seed round with investments from Plug and Play and Boldstart Ventures!

We took our time and engaged with potential investors carefully for this seed round. Ultimately, we decided to steer away from some of the more traditional crypto investors or a token sale at this stage. It’s not because we do not value them, but because we want to make sure we are pushing ourselves to evolve quickly, driving innovation born of fiscal restraint. Venture is good at that.

Our goal is to become the Heroku or Rackspace of blockchain. And that requires some serious engineering chops — chops best developed iteratively with clear milestones, by an engineering team under pressure. Our task isn’t an “R&D-driven, blue-sky strategy”, but rather a clear end-state objective: We need to be able to pre-configure any chain on any network, and build an orchestration platform. That, my friend, requires discipline.

We found our first supporter this summer. We had just launched our website, and almost immediately got an email from Scott Robinson, VP of Fintech for Plug & Play. After a brief conversation about the need for “agnostic shovels”, he was in. From there, we got invited to the Plug & Play selection day, secured a place in their accelerator, and scored our first investment. That meant Arun, our CTO & Co-Founder, moved into their office space in Silicon Valley.

Having built companies in the past, I am always nervous about the initial concept/scale phase, especially when it comes to ensuring the engineering brains partake in the excitement of a new venture. Plug & Play provided both in spades, from pitching in front of great investors, to over 30 “deal-flow meetings.”

My opinion about the former hasn’t changed much — taking meetings with innovation centers or corp dev units of large companies tends to be a waste of time for a blockchain infrastructure start-up. It requires too much education (them), and inherently takes the focus away from being a platform product for the community (us) — not an easy chasm to bridge. In addition, some of the NDAs were simply untenable. When it comes to the benefits of accelerators, however, my expectations not just changed, they were surpassed by multiples.

Plug & Play provided the perfect proving ground to refine our narrative and focus our product. We met other start-ups in our space, and were able to build connections and potential projects with them. In addition, we were able to learn a lot from some of the Plug & Play alumni, especially blockchain-focused ones Stellar and Factom. And it provided us with an invaluable new network — not to mention the free lunches, hundreds of thousands of dollars of cloud credits, and a genuine exciting group of Plug’n Players to help shepherd us forward.

So, with the cash from Plug & Play (and one amazing angel) burning a hole in our pocket, we set a goal for ourselves: make it last until at least the end of the program, then fill out the whole round quickly — and hit the gas. To avoid diluting ourselves, yet still offer early investors a great opportunity, we knew we didn’t want to raise too much, so we needed to be crafty until our story hit home.

We learned that there is a problem when it comes to blockchain infrastructure, beyond the absence of simple tooling. The benefits of a decentralized network are often outweighed by the cost of network and complex deployment. In addition, it is nearly impossible to predict cost for networks. Plus, the existing solutions from Azure, AWS, IBM, Google, etc., aren’t built with decentralization in mind.

Decentralized chains need a way to centralize their bargaining power to manage costs. Projects need a tool that accepts crypto for infrastructure, that allows for easy re-deployment, with as little upsell as possible. So we decided to do just that — to allow for projects to share infrastructure at cost over time. We believe that blockchain developers should be spending more time building their applications than trying to figure out why cloned nodes on amazon spit out the same random numbers. That’s the big vision.

And for that we needed an investor who believes in the importance of disrupting the blockchain infrastructure, without pushing us into an ICO or other aggressive speculation quickly.

Finding that investor wasn’t as easy as we thought — and my activity as an advisor in the ICO space hasn’t helped. Po.et, madnetwork.io and other projects of which I am a public supporter left a ton of folks with the impression that I am just laying the rails for a large-scale crowd-sale. I am not saying that could never happen. I am saying that it can only happen if we deliver real engineering value at scale for the community first.

We met Boldstart VC at the end of our accelerator program, and immediately felt they got us. They introduced us to hyperfab.io, which gives us access to some bigger players and engineering support around integrating fabric. That is the kind of networking and support we need — practical and to the point.

Now that we are truly on our way, we urge you to reach out to us with any questions when it comes to deployment of nodes on Hyperledger (Fabric), Ethereum, Corda, Quorum etc. We’re building this for all of us, the blockchain community, so don’t be shy!

Let’s boldly plug away.