Getting funding for their startups is not an easy feat for blockchain entrepreneurs.
Despite the rising prevalence of blockchain in today’s world, it still isn’t enough to push blockchain at the forefront of investment. More startup companies are turning to outside funding in order to gain the money they need to run their digital business.
Unfortunately for them, it’s not that easy to ask investors to fund a blockchain startup. This is what blockchain investors look for in a startup before they decide to take the plunge.
Blockchain may be an innovation all in itself, but that isn’t enough for investors who want real innovation from an individual company.
Real innovation, in this case, can be defined as something new and unique that a company has managed to come up with using current or upcoming technology. Blockchain is a technology that can potentially contribute to the modernization of our businesses and our economy. And it’s involving very fast.
Based on this statement, it would seem like investors are the ones not having enough projects to invest in. If entrepreneurs can focus more on developing their blockchain-capable businesses more, they will be able to attract investors who are specifically looking for something new created out of blockchain technology.
Investors are not interested in using blockchain in isolation. They are interested in seeing how blockchain can be used in relation to other technology, such as artificial intelligence, for instance.
Although both have remained as standalone technologies in the last decade, more and more academics have been trying to combine the two. The convergence of blockchain and artificial intelligence could lead to several benefits in various sectors, including healthcare and finance, the two sectors that see the most identity fraud cases in recent years.
With blockchain and AI integrated together, companies in these sectors can create an encrypted method of storing sensitive data that can then be securely unlocked using the knowledge and sophistication of AI.
This is just one example of the way blockchain can be used to improve existing technology and even create an entirely new technology altogether.
Investors are also interested in a startup that can suggest and develop useful blockchain solutions that even the mainstream public can accept and adapt.
Many companies use the word blockchain as a buzzword in order to entice investors, which is why many investors tend to avoid those. These investors prefer companies or projects building something with the core value that comes from a set of functions native to blockchain and cannot be attained in the absence of blockchain.
Another thing that investors look for in a startup is valuable data. Valuable data can lead to valuable discoveries, and at the same time, help create projections and forecasts for specific startup products. Like any serious investor, most investors prefer to invest in a product when it’s still fresh on the market, as long as its forecasts are positive.
One of the biggest problems with blockchain startups is that they try too hard to look for problems to solve, instead of solving problems that are already in front of them. Investors want someone with a clear vision for what they’re building, a balanced skill set, and an ability to get things done.
Lastly, investors are attracted to startups with founders who are attentive to industry happenings and are quick to adapt their business based on current situations.
The reason for this is two-fold. One, staying updated on whatever’s happening within the industry ensures investors that the founders themselves are interested in blockchain and are thus motivated to improve the sector. Two, knowing how to adapt to remain sustainable and profitable is extremely vital in running a business in the digital realm.
Just using the word blockchain in your business proposal is not enough to secure funding from investors. If you can integrate all these factors that affect the decision-making process of investors, you’ll stand a better chance of getting your company funded.