How Cryptocurrency Is Changing The Game For Startup Investors


2018 has been a phenomenal year for the growth of blockchain and the cryptocurrency sector as a whole. This year, it finally became a normal trend for startups to get their initial funding through the sale of ICO tokens. This method effectively replaced the usual fundraising drives that have now been relegated to the past. More and more business were, therefore, able to raise money even without a proper business model. These changes have definitely had profound effects on the investment realm as a whole.

The shift to ICO fundraising happened sometimes in mid-2017 when multiple startups made their ICOs public. The success that followed those ICOs was what truly gave the changing fundraising landscape traction. Over 90% of the startups that announced ICOs ended up raising enough capital to kickstart their businesses. Since that time though, the trend has slowed down as investors now focus on identifying only the best startups for investment. This has not changed the perception that the market has on cryptocurrencies like Bitcoin. In fact, Bitcoin continues to soar as more and more companies accept it as a means of payment. The markets have also continued to record positive growth of various cryptocurrency pairs.

Startup founders are also changing their fundraising strategies

As new startups pop up everywhere, investors have become more cautious about which projects they are willing to invest in. This has forced startup founders to change their fundraising strategies in order to get funds. One of the things that founders have started to do is keeping off from announcing an ICO until a proper business model has been established. Many founders who announced their ICOs too early have been having trouble explaining the business model to investors. More and more startups are now considering exploring the markets by themselves and then only returning to announce ICOs when they have identified a product-market fit.

Another strategy that has been adopted by shrewd founders is studying the market extensively to know what kind of legal regulations they should abide by. Most founders launch their ICOs without knowing the exact model they should consider in terms of legal regulation. The most common mistake that founders make is to go for regulations that are not fit for their fundraising efforts. This is especially so when they do not understand the different regulatory regimes that exist between Token Sales and ICO offerings. Studying the regulations thus allows founders to take the appropriate steps when selling the company’s securities in an ICO offering.

More professional investors are getting involved

Investors in the cryptocurrency world have often been people in the tech industry who have a passion for the blockchain realm. In 2018 though, this has changed dramatically as more and more professional investors from across the board are getting involved with cryptocurrency. This has improved the perception of this investment field and raised the stakes for the industry. Big financial firms like JP Morgan and CME Group have not only embraced cryptocurrency but they have also launched various investment products under the cryptocurrency umbrella.

The same story has been replicated in the venture capital realm where huge companies have decided to invest in ICOs. Andreessen Horowitz and Sequoia Capital are just some of the names that have gotten into this world in recent times. The events that have occurred as a result of this investor confidence have been crucial. Innovation has, for instance, achieved a wider scope where products are now being launched for the mainstream market.

The future prospects for investors

The general consensus from investors is that the market will now gain stability as more serious investments start to roll in. 2017 was just the turning point for the industry and this year will continue achieving new milestones. There is more likelihood that ICOs will now be phased rather than one-time events. It is expected that the future of ICOs is the adoption of key goals that drive the objective of the ICO. Regarding their perception, ICOs will continue to be the most preferred methods for startups to raise funds.

Many huge businesses are yet to get on the cryptocurrency train. This will change soon though as the businesses start to embrace crypto tokens in their ecosystems. This is already happening as companies like iCandy Interactive Limited have demonstrated. Startup investors thus only need to focus on doing proper research before announcing their ICOs so that they can get the kind of funding they require to kickstart their businesses.