Why ‘Now’ May Well Be the Right Time to Start a Block a Blockchain Company
With the crypto market growing again, here are the three main factors to watch out for if you’re starting, or investing, in a company in the space.
7 min read
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A little over two years ago, I was at my company’s holiday dinner, and the only topic of conversation was the stratospheric rise of cryptocurrencies like Bitcoin, Ethereum and those others that were lesser known but certainly more amusingly named (like Putincoin).
With Bitcoin at that time topping $20,000 and Crypto Kitties also hitting the world by storm, something momentous was afoot; and we all wanted in. Yet, my company’s CTO called a halt to our excitement, cautioning that a deep decline was coming. The reason he gave: The potential of the Blockchain — the platform through which cryptocurrencies are built — to create real-world applications with strong customer use cases had yet to be realized.
“Raising $10 million from retail investors on a two-page paper is not enough,” our CTO said.
Boy, was he ever right. What came next was that massive slump, in which Bitcoin lost over 80 percent of its value, and the swiftness with which the SEC put an end to initial coin offering scams.
In particular, I was struck at the focus and discipline of these entrepreneurs from Binance Labs, the venture arm of Binance. Rather than releasing a white paper and trying to raise money on ideas and theory alone, these people had already fully built their product, conceived of applicable real-world use cases and secured strong early customer traction.
More important: They were focusing, as has startup fund-raising has traditionally done, on getting skilled investors on board, the kind of investors who contribute so much more than just capital.
This got me thinking: Is now the time to invest in or start a Blockchain-focused company? What are the factors that entrepreneurs and investors should be looking for in this space?
To quote the words of Wired founding editor Kevin Kelly, now (yes, right now) is the best time to start something (never mind that he wrote those words in 2014). This mindset, in my opintion, is extraordinarily applicable to the Blockchain which, as it matures, presents more and more opportunities to create new solutions. To take advantage of this trend, entrepreneurs and investors should seek opportunities that present an immediate real-world application as well as customer traction.
And these investors should be ones whose value-add is more than just capital; the colleagues they bring in, meanwhile, should be the type interested in the long-term impact of the technology.
Real-world traction matters.
At Binance’s demo day, nearly all presenting companies had some early customer buy-in and traction. Whether it was a brand signing up for a test run on a new decentralized loyalty platform or a marketplace touting the growth of its supply-side volume, customer-use cases won the day. Many e