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I've seen hundreds of crypto startups succeed and fail since starting Stackup. The path from idea to successful crypto company is more defined than most realize, though it's rarely discussed clearly. While crypto technology evolves rapidly, the steps to build a strong foundation remain consistent.
This guide walks you through that journey step by step, from incorporation to your first growth stage. We'll cover everything from corporate structure and regulatory compliance to fundraising and operations - the concrete decisions that turn your crypto startup into a real company.
There are a lot of people who think crypto startups are fundamentally different. My experience has been that they aren't that different. While crypto has unique challenges, the fundamentals of building a successful startup haven't changed. Yes, the regulations are stricter. Yes, the market moves faster. And yes, mistakes can be catastrophic. But whenever someone tells you to completely abandon what works for traditional startups "because crypto is different," be skeptical.
Crypto technology may be new, but business fundamentals and human behavior aren't.
Let's start with your first crucial choice: how to structure your business.
For a venture-backed crypto startup, you'll want a Delaware C-Corporation. While an S-Corporation has some benefits like pass-through taxation, it won't work for venture funding. S-Corporations can't have more than 100 shareholders, can only issue one class of stock, and can't have non-US citizen shareholders.
A C-Corporation, on the other hand, can have unlimited shareholders, multiple stock classes (essential for venture funding), and any type of shareholder. Yes, C-Corporations face double taxation, but for a venture-backed startup focused on growth rather than profitability, this rarely matters in the early years.
Delaware has been the gold standard for corporate law for over a century. Its specialized business court, the Court of Chancery, provides predictable legal outcomes based on extensive case law. The state offers strong privacy protections - you don't need to list directors or officers in public filings, and only a registered agent address is required. Most importantly, venture investors expect and prefer Delaware corporations because the standard terms and structures are well understood.
While Wyoming has created specific crypto regulations and recognition for DAOs, these benefits primarily apply to decentralized organizations. For a traditional venture-backed company, Delaware's established corporate framework remains the better choice.
You don't need expensive lawyers to incorporate. At Stackup, we used Stripe Atlas, and it worked perfectly for our initial needs. For $500, Stripe Atlas handles the entire Delaware C-Corp incorporation process, including registered agent service, EIN registration, basic stock issuance, standard legal templates, and bank account setup. LegalZoom offers similar services starting at $400, though with less startup-specific features. While you'll eventually need lawyers, starting with these standard tools works perfectly for initial needs.
The standard incorporation package includes several key documents. The Certificate of Incorporation authorizes your initial stock (typically 10 million shares at $0.00001 par value) and establishes basic corporate powers. The bylaws set out how your company will be governed - everything from board meetings to shareholder voting rights.
The Founder Stock Purchase Agreements detail how you'll buy your initial shares and how they'll vest. The standard terms are four-year vesting with a one-year cliff, meaning you'll earn your shares monthly over four years, but you won't get any if you leave before the first year. Your Founder Stock Purchase Agreement should include Early Exercise, which allows you to exercise your stock options before they’ve vested. You should exercise your options right away. You'll need to file an 83(b) election with the IRS within 30 days of signing these agreements to optimize your tax treatment in the United States. Even if one of your founders isn’t in the United States, they should file an 83(b).
The Intellectual Property Assignment ensures all relevant IP belongs to the company - an essential requirement for future investors.
From your 10 million authorized shares, you'll typically allocate about 8 million to founders and reserve 1-2 million for an employee option pool. Y Combinator advises keeping founder equity splits as equal as possible - ideally 50/50 for two founders, or as close to equal as you can justify if there are more. They recommend basing splits on future contribution rather than past work, and getting everything in writing immediately. If equity splits are equal between cofounders, typically one founder will be given one extra share to break any ties.
The standard four-year vesting schedule with a one-year cliff applies to everyone - founders and employees alike. Early employees might receive anywhere from 0.1% to 2% equity depending on their role and timing, with technical hires typically getting the larger grants. The option pool usually starts at 10-20% of the company's equity.
With your legal structure in place, you need to set up the systems that will run your company. All these systems add up to roughly $500-$1000 per month for a small team, but they're worth it. They'll help you stay organized, compliant, and efficient as you grow.Start with cap table management - most startups use Carta or Pulley, which make it easy to track equity, handle option grants, and manage future funding rounds.
For payroll and benefits, Rippling and Gusto are the most popular choices. Rippling has better IT management features but costs more - expect to pay around $8-15 per employee per month. Gusto is simpler and slightly cheaper. Both handle multi-state compliance, which you'll need as you hire across different states. They can also help set up health insurance and other benefits when you're ready. You'll also need to register your company in any states where you'll have employees. Most payroll providers can help with this process.
If you have team members in different countries, you will need to hire them as contractors or using an Employer of Record. An Employer of Record is a third-party organization that takes on the legal and administrative responsibilities of employing staff in the other country. Popular options are Oyster HR and Deel. For Stackup, we have an Employer of Record for our Australian team and use Gusto for our US team.
You'll need a corporate email system - Google Workspace is standard for startups. The Business Starter plan at $6 per user per month gives you custom email addresses, Google Meet, and shared drives. As you grow, you might want the Business Standard plan at $12 per user for more storage and security features.
For accounting, most crypto startups work with an accountant that will have a preference of tools, but accounting for startups is simple enough that any standard accounting tool will do. Xero, Quickbooks Online, Freshbooks, and Zoho are popular. These tools handle your traditional accounting while your accountant or crypto software like manages token tracking and tax reporting. Your accounting stack might cost $100-300 per month depending on your transaction volume.
Communication tools are essential for remote teams. Slack for chat and Zoom for video calls are standard. Discord and Google Meet are also popular choices for small teams. Budget about $15 per user per month for each. For document management and collaboration, you'll want project management software like Linear, Notion, or Jira - these run $8-12 per user per month.
Banking remains challenging for crypto companies, but several banks now actively work with the industry. For most startups, Mercury or Brex are your best options - they're tech-forward and understand crypto businesses. Stackup banks with Mercury. Silicon Valley Bank (now First Citizens) and Bridge Bank are good alternatives, especially if you've raised substantial funding.
When applying for a bank account, presentation matters enormously. Frame your company as a blockchain infrastructure provider rather than a "crypto company." Emphasize that you're building software tools and never handle customer funds. This positioning, combined with clear documentation (business plan, corporate docs, and EIN), dramatically improves your chances of approval.
Avoid red flags in your application: don't mention token sales, trading features, or yield products unless this is a key part of your business. Keep the focus on your infrastructure or software product.
You'll need reliable fiat-to-crypto rails for treasury operations. Circle is typically best for high volumes, offering direct USDC issuance with fees around 0.1%. Coinbase Prime works well for medium volumes with slightly higher fees but more stablecoin options. FalconX is a solid alternative for larger operations, though setup is more complex.
The verification process typically takes 2-4 weeks. Start early and prepare your documentation - company formation docs, proof of address, and expected volumes. Once approved, set up automated reconciliation and monitoring systems before you start moving significant volume.
Remember: Banking and fiat operations are crucial infrastructure. Set them up early, even if you don't need them immediately.
Start simple with your company wallet setup - you can always upgrade as operations scale. For early-stage companies, a hardware wallet (like Ledger) provides a good balance of security and usability. Safe’s smart contract wallet may also be a good option if you need multi-signature capabilities, which means multiple team members need to approve transactions. It’s free, though not very good for daily operations.
Keep your setup minimal until you have real operational needs. Once you're actively deploying contracts or running frequent operations, you'll want to upgrade to a more sophisticated system like Stackup for programmable spending controls and automated operations. Remember that wallet infrastructure can be upgraded smoothly - it's better to start simple and secure than to overcomplicate your setup early on.
The regulatory landscape for crypto companies is complex, but there's a reason successful companies share certain patterns. Most try to minimize their regulatory burden by staying non-custodial and avoiding anything that could be viewed as a security or money transmission. Let's understand why, and what you need to consider.
Non-custodial services - where users maintain control of their own funds - generally face fewer regulatory requirements. This usually results in a better product anyway. When users control their own assets, you don't need complex custody solutions or extensive security measures. You're building tools that help users interact with blockchains, not holding their money.This is why successful crypto infrastructure companies often focus on non-custodial solutions. Stackup, for instance, never takes custody of user assets - all spend controls are applied onchain, reducing both regulatory burden and operational complexity.
Three federal regulators matter most for crypto companies:
The Securities and Exchange Commission (SEC) oversees anything that might be considered a security. They use the Howey Test to determine if something is a security: if people invest money in a common enterprise expecting profits from others' efforts, it's probably a security. This affects token sales, investment products, and potentially even some DeFi protocols. The SEC has been particularly active in crypto enforcement lately, so you'll want to stay well clear of anything that could be considered a security unless you're prepared for heavy regulation.
The Financial Crimes Enforcement Network (FinCEN) focuses on preventing money laundering. If you're transmitting value between parties - like running an exchange or payment service - you might need to register as a Money Services Business (MSB). This brings requirements for know-your-customer (KYC) procedures and suspicious activity reporting.
The Commodity Futures Trading Commission (CFTC) regulates derivatives and commodity trading. They've claimed jurisdiction over crypto spot markets too, though they're generally less aggressive than the SEC. If you're dealing with futures, options, or other derivatives, you'll need to consider CFTC requirements.
States add another layer of complexity. The big one to watch for is money transmission. If you're transferring funds between parties, you might need state money transmitter licenses - and getting licensed in all states can cost millions.
New York has the infamous BitLicense, required for any virtual currency business serving New York residents. It's expensive and time-consuming to obtain, which is why many crypto companies simply don't serve New York users. Other states are following suit with their own frameworks, though none are quite as burdensome as New York's.
Given this complexity, most successful crypto startups follow a few principles:
You absolutely must speak with an experienced crypto lawyer before launching your product. While this guide outlines general principles, the details matter enormously. A small change in how your product works could mean the difference between minimal regulatory requirements and needing millions in compliance spending.
Your lawyer can help you:
Just a short conversation can get you on the right track. This might seem expensive - good crypto lawyers often charge $1,000+ per hour - but it's far cheaper to have a single conversation now than having to rebuild your product later or face enforcement actions.
Remember that compliance isn't a one-time thing. The regulatory landscape changes constantly. Something that's clearly allowed today might be questioned tomorrow. Build your product with flexibility in mind, and maintain a relationship with your lawyers to stay current on regulatory changes.
This might all sound daunting, but it's manageable if you approach it thoughtfully. Many successful crypto companies operate with minimal regulatory burden by carefully designing their products and staying within clear boundaries. The key is understanding these boundaries before you build, not after.
Before you can start building a team, you need to validate your idea and make sure you're using your initial resources wisely. Let's talk about the crucial early stages.
Most crypto startups start with a combination of founder savings and small investments from friends and family. The goal is to have enough runway to validate your idea before raising venture capital. In 2024, plan for at least 6-12 months of runway. At Stackup, the founders didn’t pay themselves for about 5 months before getting a first pre-seed check.
Before writing any code or raising any money, talk to users. I can’t emphasize this enough. Choose a persona and identify their biggest problems that they are spending money on. What manual processes are slowing them down? What keeps them up at night? What would they immediately pay for if it existed?
The best validation is someone offering to pay you money to build something. The second best is someone showing you their exact workflow and explaining why existing solutions don't work. Everything else - including enthusiastic feedback about your idea - is noise. I recommend reading “The Mom Test” by Rob Fitzpatrick to get a quick primer on how to talk to customers and avoid false positives.
Once you have a strong idea based on user needs, you are ready to start validating your idea by building. Ask yourself: What's the core technical or market assumption that could kill your business? Test that first. If you're building infrastructure, this might be a proof-of-concept showing you can handle transaction volumes reliably. If you're building user-facing products, it might be demonstrating that your approach is significantly better than existing solutions.
A lot of crypto companies are tempted to launch a project token. I recommend against it in most cases because project tokens most often lead to unsustainable business dynamics. It exposes you to regulatory risk, the benefits are largely short term, and token prices distract from metrics that actually reflect product market fit. Equity is a much better incentive in most cases.
If you don't have personal savings, consider raising a "pre-seed" round using SAFEs (Simple Agreement for Future Equity). Y Combinator's standard SAFE documents work well, and you don’t require a lawyer to review it.
The process for raising a pre-seed is simple, but sometimes people do it in the wrong order. I’ve found that the approach that worked best for me is:
Try to pack your investor meetings into short bursts, like 3 pitches per day for two weeks straight. This will be exhausting, but it’s better than having only one or two meetings per week for months. This strategy makes it easier to pick out what feedback is a pattern and which is noise, packing meetings together creates a sense of urgency for investors to make a decision, and rejection is easier when you have more meetings around the corner.
Managing your mental health during fundraising is paramount. Fundraising is unnatural; our brains aren’t designed to handle the amount of rejection you’re going to get. You’ll see other crypto companies who seemingly had an easier time raising money than you, and you may feel distressed or like a failure. Everyone experiences this - just keep refining your pitch and your product, and eventually things will work out.
Don’t be too stingy with accepting only “good” investors at this stage; you could have the best name brand investors and it won’t determine whether you’ll find product-market fit. The only thing that matters at this stage is that your company survives and builds something people want.
There are a lot of crypto accelerators, and it seems like a lot of them are pretty bad. Bad advice is worse than no advice at all, so I’d only do an accelerator if it’s one of the best ones. Accelerators also tend to take a lot of equity, and are often not worth it.
The best accelerators for crypto companies are a16z’s Crypto Startup Accelerator (CSX), Y Combinator, and 500 Startups. Stackup went through Y Combinator and it was really valuable to us. Even though they didn’t have a lot of crypto expertise, they were very really good at keeping us on-track and avoiding the unsustainable growth pitfalls a lot of crypto companies were making.
SAFEs have become the standard for early-stage fundraising because they're simple, founder-friendly, and cheap to execute. Unlike convertible notes, they're not debt - they're a promise of future equity with no maturity date or accruing interest.
Here's how a SAFE works: an investor gives you money now, and that investment converts to equity when you raise a priced round later. The SAFE specifies a "valuation cap" - the maximum effective valuation at which their investment will convert. For example, if someone invests $100k on a $5M cap SAFE, and you later raise money at a $10M valuation, their investment converts as if the company was worth $5M. This rewards early investors for taking more risk.
Y Combinator's standard SAFE documents work well and are widely understood by investors. They come in four varieties:
For pre-seed rounds, stick with cap only SAFEs. Some investors may want a token warrant even if you don’t plan to issue a token. This is totally fine, but you’ll want any proposed token warrant reviewed by a lawyer. Avoid weird terms like additional advisory shares or discounts. If a pre-seed investor asks for a lot of terms they aren’t a good fit.
Typical amounts range from $50k to $500k each, usually at a $4-10M cap. Some founders try to optimize by negotiating different caps with different investors, but this creates unnecessary complexity. Pick a fair cap and stick to it.
Target angels and small funds who understand crypto - they'll be more helpful than generalist investors at this stage. Good early investors also help you raise your next round by signaling to other investors. An investment from a respected crypto angel is worth more than the same amount from an unknown investor.
The best part about SAFEs is speed. You can get funding in days instead of weeks or months. There's no complex negotiation about board seats or other rights - those discussions wait for your priced round. Just make sure you understand that SAFEs convert in the order they're signed (earlier SAFEs get better prices if the caps are the same), and that you're comfortable with the implied dilution when they convert.
After you raise some money, you can begin paying yourself. How much you pay yourself is very dependent on your life circumstances, but the typical advice is to pay yourself enough to not worry about money but not enough to save. I’ve seen some founders pay themselves as little as $30k per year or as much as $150k per year, but it seems like the median is about $100k in California.
During pre-seed, your startup probably needs at least $20-$30k per month to pay for one to two founders who spend money frugally. The advice we got at YC was to keep our burn rate at or below $50k per month before finding product market fit, though infrastructure or other capital-intensive businesses will spend more.
Once you get some initial traction or refine your idea, you will likely need to raise a seed round. Just like with a pre-seed round, a seed round is typically done with SAFEs but may have more diligence and terms.
A median crypto seed round in 2024 is about $3m at a $15m post-money valuation, but there is a lot of variance.
Some large protocols or new blockchains raise tens of millions in their seed, while some projects raise a lot less. It’s important to note that there is very little correlation between the future success of a company and the size of a seed round. Coinbase struggled to raise a $600,000 seed round.
Your primary goal is finding product-market fit. Everything else - team structure, development process, marketing - should optimize for learning and iteration speed. Here's how to set up your operations to maximize your chances of success.
Early crypto teams need to balance technical capability with speed. For most non-custodial products, start with 2-4 engineers including the founders. Resist the urge to hire non-technical team members. All non-technical work, especially sales, should be done by the founders.Compensation should be competitive but not extravagant. Match market base salaries but be generous with equity (0.5%-2% for the first few engineers). Consider token warrants as additional upside, but keep the terms simple. Standard four-year vesting with a one-year cliff works well.
At the early stage, your product will evolve significantly. Don't optimize for specific technical skills - instead, look for:
Technical skills matter less than you might think. Strong engineers can pick up blockchain development quickly. Look for people who have built complex systems in any domain.
Your early hires will make or break your company. The bar should be extremely high - if you're not excited to work for their startup, it's a no. Two interviews is enough to evaluate most candidates.The first interview should be a 30 minute introductory conversation. Ask about their most impressive work:
Look for candidates who speak with genuine enthusiasm, show clear ownership, and focus on concrete details rather than buzzwords. Pay attention to how they talk about working with others, and have them provide very specific examples to ensure they actually did the work and did it well. At the end of the call you should have a clear idea if they are a good fit for working in a startup.
If it’s obvious it isn’t a fit, share the reason why you don’t think it will be a fit and thank them for their time.
The second interview should be a technical deep dive that lasts 45-60 minute. This should include another member of the team, who also evaluates the cultural aspects. An optional third interview should only happen if there's a specific concern to resolve. Don't use it to resolve general uncertainty - that usually means it's a no.
After each interview, ask yourself:
If any answer isn't a clear yes, it's a no. Your early team sets your culture and standards - every hire should make the team much stronger. Don’t hire anyone because there’s just a lot to do - you will always have too much to do, and “capacity hires” rarely work out.
Your first few hires will define your company culture. Take time to find people who can grow with the company but move quickly once you find them.
Once you decide to hire, let them know that you would like to move forward with creating an offer. I often do this over the phone and ask them what their compensation expectations are, if they prefer a larger fraction of their compensation to be equity or salary, and things like that. Then you can structure an offer transparently. Typically, terms will be:
Be direct about what you can offer. Share your thinking on equity value and discuss future fundraising plans. Good people value transparency - focus on mission alignment and growth opportunities if you are unable to meet their ideal compensation.
When you begin your company, you should set one primary KPI that you will judge your success by. For most crypto companies, this is revenue, though some social products should track usage.
You’ll also track along with burn rate (monthly costs minus revenue) and runway (how long until funds run out).
Together revenue, burn rate, and runway are your startup’s vital signs. But tracking revenue isn’t enough - you’ll need to track the 3-4 secondary metrics that make up your revenue. For a B2B crypto developer tool, this may be:
A good startup will have 15%-20% monthly revenue growth. Retention is a really strong indicator of product market fit and should be tracked carefully. It is the most direct measure of how valuable your product is. Small changes in retention have big effects: 95% monthly retention means you retain only 54% of your customers in one year, but 90% monthly retention leaves you with only 28%.
At the beginning of your startup journey, you will have to charge something. A lot has been said already on pricing, so I recommend watching Kevin Hale’s video on pricing.
Building a successful crypto startup isn't fundamentally different from building any other startup, but it requires navigating some unique challenges. The fundamentals - strong product-market fit, solid team building, and sustainable growth - matter more than crypto-specific trends.Here's what matters most:
First, get your foundation right. A Delaware C-Corp with standard vesting terms saves headaches later. Your initial systems - from payroll to banking - don't need to be perfect, but they need to work reliably. Start with proven tools like Stripe Atlas, Mercury, and standard development platforms.
Second, regulatory clarity is crucial. Stay non-custodial if possible - it's usually better for your product and dramatically reduces regulatory burden. When in doubt, talk to experienced crypto lawyers before launching. A single conversation can save months of rework.
Third, fundraising requires persistence. Start with a strong pitch deck, reach out to hundreds of potential investors, and use standard SAFEs to keep things simple. Don't optimize for perfect terms or chase the biggest check - focus on investors who can help you build.
Finally, build your team carefully. Your first hires shape everything that follows. Look for learning velocity and ownership mentality over specific crypto experience. Pay market rates, be generous with equity, and maintain extremely high standards.
The path from idea to successful crypto company isn't easy, but it's more defined than most realize. Focus on fundamentals, move thoughtfully but quickly, and remember that technology trends change but good business practices endure.
