How Cryptocurrency Can Help Startups Get InvestmentApr 15, 2020, 5:42PM
How do you launch a cryptocurrency of your own and how can you use it to raise funds for your startup in four simple strategies.
VC firms are the most famous and lucrative ways for startups to get funding. The headlines of companies raising millions in Series A constantly blow up on Tech Crunch. That’s why startup owners mostly bet on venture investments as the only way to scale and expand.
However, the pool of VC startup investment firms is narrow and the criteria they have to invest in businesses are strict. Rather than giving small amounts of money to businesses that could generate millions, VCs are looking for companies that are already making billions and can be sold for billions.
To get funding and survive in the competitive market, startup owners need to look for other sources of funding. At first, we relied on crowdfunding - platforms like Kickstarter and Indiegogo.
Then, something bigger and yet more promising appeared - the advent and growth of cryptocurrencies in the blockchain and the banking sector. It didn’t take innovative startup owners to find a way to use a cryptocurrency for attracting investors. Let’s take a look at how diving deeper into tokens can help you raise more.
Top 3 Programming Languages Used to Build Crypto
If you decided to start a cryptocurrency of your own, take some time to research the logistics behind it. In a nutshell, you will need to choose a Blockchain platform - there are plenty of options on the market - and figure out the system’s internal architecture.
To launch a successful cryptocurrency, you need to choose a dominant programming language as well. Take a look at the technologies that are a go-to choice for cryptocurrency developer communities all over the world.
C++ is known as one of the most versatile software development languages. Its advantages are high reliability, scalability, and ease of integration with different types of hardware.
The programming language is popular in Blockchain projects due to its high processing capacity - C++ can handle millions of concurrent requests. The main downside of C++ is that it’s not a Blockchain language per se, meaning it has a lot of redundant tools you’ll not use when designing crypto tokens.
Python is another go-to choice for thousands of cryptocurrency communities all over the world. For one thing, the language is easy to learn, has a large following of Python programmers for hire and a robust library of extensions.
The data-driven nature of the languages makes Python a particularly suitable candidate for Blockchain and crypto development. There’s no better technology for processing large sets of information, visualizing the graphically, and cleaning through bytes of data.
The programming language boasts a skilled community - Python programmers are highly skilled in smart contracts and crypto development. In other words, finding a skilled professional to complete your project will be a piece of cake.
Simplicity is a new programming language designed specifically for crypto development. It is definitely more stripped down and easier to use than a general programming language. As for the downsides, Simplicity is still new to the market - it’s hard to say how reliable the language exactly is.
Other than that, it’s geared towards smart contracts rather than crypto - every now and then, cryptocurrency developers might feel like they don’t have enough tools at their disposal.
4 Ways to Use Cryptocurrency to Raise Funding
Depending on your scale and ambitions, there are different ways to integrate cryptocurrency into your startup. Here are 4 ways for startup owners to make tokens work for them:
1. Launch an ICO
An ICO (an initial coin offering) refers to creating and raising a company’s proprietary cryptocurrency that people will buy (with crypto or fiat currency). As your startup is developing, ICO investors hope for the growth of the company’s token so that they can exchange it for money and make considerably more than they invested.
Unlike with IPO (initial public offering), you don’t have to share ownership stakes with investors - so startup owners get to keep their freedom. All in all, ICO introduces you to a pool of investors, larger than the VC firm market since every person can make a small contribution to the company.
2. Create a new cryptocurrency product
Cryptocurrency is a lucrative niche for startups - according to statistics, in Q1 of 2019, companies raised $783 million in investments. Thus, building a crypto product can help companies become more relevant among investors and VC funding.
As for the ways to integrate crypto in your startup, you can either build a blockchain platform, create your own currency, or build a trend watching app that helps people stay updated on the state of the crypto market as a whole.
3. Join a crypto accelerator
Since crypto is highly popular among startup owners, jumping on the bandwagon of the trend will make it easier for you to network with other business owners. By attending crypto events and becoming a part of accelerators, you can get in touch with the trendsetters of your local tech hub. Establishing a network increases your visibility in the startup world and, by extension, makes investors more aware that your company exists.
By using crypto as a stepping stone to get a name in the startup community, you will make raising investments for a non-crypto product considerably easier.
4. Encourage clients to pay in crypto
Remembering the peak of Bitcoin back in December 2017, a lot of startup owners switch a part of their operations to crypto. This is a reasonable move since the sprouting growth of the currency people use to pay you can increase the company’s overall capital by numbers without you having to actively seek new investments.
As a new startup owner, you have to be cautious when enabling crypto payments. Refusing fiat currency payments altogether is a no-go since you will be losing clients who don’t own crypto. Other than that, the value of crypto is unstable and can fall as fast as it rose - you don’t want to bet all your revenue on a stroke of luck.
Even if the concept of cryptocurrency is not connected to your project directly, you should give it a try as a way to establish a following in the startup community, build a network of like-minded entrepreneurs, and raise funding. Startup owners can either launch an ICO to broaden the investment pool or build crypto-based innovations and become more relevant for VC firms.
There’s always a way to make crypto work for your startup - you just need to be open-minded and consider all available options.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.