How Liquorice Raised a $1.3M Pre-Seed in 4 Months From 8 Investors

The company

• Liquorice — a capital efficiency tool and shared inventory layer for on-chain trading

• US-incorporated, with global traction

• Raised — $1.3M from three VC funds and five angel investors

• Instrument — SAFE plus a token warrant, and some side letters

• Pre-seed and effectively pre-product at the time of the raise

Founders

• Team of two co-founders

• Misha — founded VelvetFormula, an early crypto market-making company providing liquidity to digital-asset exchanges, with clients including crypto.com; before that, exited a FinTech startup

• Toly — owned B2Broker’s institutional crypto liquidity product, with $3B/month turnover

• This was Misha’s third fundraise

• A couple of developers partnered with them, essentially for free, to build the product — investors read that as traction in attracting talent

Pipeline and channel

The one term sheet came from the lead; the other two VC funds and five angels joined behind it on the same SAFE — the chart’s last row counts all eight.

• 100% warm intros — an experiment: not a single cold letter or message was sent

• The mechanic — you pitch, the investor passes and offers an intro to someone at another fund; the angels you pitched introduce you further, “a self-propelling thing”

• The target from the start was to hit 100 investors; it landed at 126

• The honest trade-off — warm intros work perfectly, but they are slow; four months is a slow fundraise

• Generating a warm intro is a big task in itself

Timeline and runway

• Four months from start to close

• Term sheet negotiations — about a week; everything else was pitching, and finding the warm intro to pitch

• Runway at start — zero: no salaries, no employees, the two founders lived on their savings

• Lead investor — no deliberate lead hunt; Misha pitched everyone and was looking for any type of check, not specifically a lead

• The lead was a fund that takes fairly long to do deals; once its term sheet arrived, the round was effectively closed

• Oversubscribed more than 2x after the term sheet — some funds had to be cut

Pitch deck and data room

• Pre-seed and effectively pre-product, so there wasn’t much to show

• Two or three hackathons — what they built there, the prototype and how it is going to work

• A deck and a forecast model were made, but “the model is probably not important at all at this stage”

• What matters at pre-seed is founder fit — previous experience, why this problem, why these two together and how long they have known each other

Most common rejections

• Too early — “we like the product, but we want to see traction”

• Execution doubt — one fund said outright that it did not believe the team could execute

• Honest answers are rare; most passes come as white lies about traction or stage, or simply not vibing with the founders

• Investors were looking for two things — a good idea and the momentum of the raise itself; the slow process cost them the second

Metrics at close

• Angel checks — $10K to $25K; checks above $50K from angels are rare in crypto

• The lead investor took half the round — about $700K

• Oversubscribed more than 2x once the term sheet was signed

• Instrument — SAFE plus a token warrant, with some side letters

• Effectively pre-product — the hackathon prototype was the demo

Lessons learned

• Momentum is the core lesson — investors you talked to three or four weeks ago drift away when they see no new checks or fundraising news

• Compress the raise into weeks, not months — “avoid being slow”; when you need money you are desperate, and investors feel it

• The crypto follower dynamic — around 90% of crypto funds follow; secure a lead and the round is oversubscribed

• Raise when the market is ready for it, not when you are — favorable conditions beat need

• If raising again — keep warm intros, the best tool there is, but find a way to generate them faster

• Next round — October; this time the opposite experiment, cold outreach made efficient with AI, plus an AI-built social graph to generate more warm intros