Last week, an analysis of the blockchain projects on Github’s platform shocked a lot of people. Of the over 80,000 projects in the network, there was only an 8% project survival rate, which seems like a pretty dismal outlook for those looking to create their own startup using blockchain.
There is no exact science to creating the perfect startup, especially within such a new industry. While many people know of Bitcoin, its distributed ledger technology and its potential are less well-known, though popularity is rising. Governments are just beginning to regulate and understand the blockchain industry, and there is constant controversy. Despite all the uncertainty, however, there are some indications on what helps a blockchain startup survive.
Bill Gross, founder of tech startup incubator Idealab, ran a study on 200+ blockchain companies to find the elements most important to startup success. He found that in a startup, the timing, the team and the idea, in the respective order, were the most important aspects whereas the amount of funds raised was the least important, which may come as a bit of a surprise to some.
Let’s look at some of the steps one should take to have a successful blockchain startup and become part of the elite 8%.
1. Consider timing
The blockchain community is heating up. Bitcoin skyrocketed in popularity and many governments are looking for tangible ways to integrate blockchain. In 2016 there were over 26,000 new startups, to say nothing of 2017. If you don’t begin ideating for your startup now, you may find yourself too far behind.
However, you must also consider the purpose of your project. For instance, some political applications (whatever they might be) may have been more successful under Obama or Hillary, instead of during the age of Trump. Gauge your specific field.
2. Consider your team
Github found that blockchain projects conducted by organization have a 15% chance of survival, in comparison to the single user-generated projects. This is likely due to a dispersed workload in an organization where people may specialize according to talent versus a single user project requiring one person to ideate, write code, prototype, and advertise. Working on a team also allows for collective brainstorming, which usually generates more effective solutions than those generated by individuals.
Github also found that projects by organizations are five times more likely to be copied and projects that are copied are more likely to last longer. Copied projects are ones where people see potential and while they may not last long this speaks to the original project’s potential for longevity.
3. Evaluate your idea thoroughly
Question absolutely everything about your startup to make sure the value proposition is rock solid. Ask yourself and your team “What will blockchain bring to your project? Can your startup perform just as well without the use of a blockchain?” Maybe blockchain in its current form isn’t necessary for your product right now, but could it be, in the future?
Don’t slap blockchain onto your project just for posterity’s sake if a blockchain won’t improve your product. Blockchain has become a buzzword recently- one British company added “blockchain” to its name and saw a 394% increase in shares, even though its blockchain project was still at an early stage. This company, now obliged to deliver their project, may very possibly disappoint, which could be disastrous for its shares.
4. Monetize your project
While funding may not be the number one most important aspect of a successful startup, it is still very necessary to find a funding model that fits your startup’s needs. Some startups are using APIs to fund their startups, but the majority of up-and-coming startups are using ICOs to fund their ventures.
If you intend to use an ICO and tokens in your startup, it’s important to maximize your token’s utility. Make sure that your token is actually given a role with distinct purposes and features, and is not just utilized for funding. Tokens could be a powerful incentivizing mechanism in your startup, so don’t squander its potential.
It is also important to be aware that ICOs have come under increasing scrutiny by many governmental watchdogs as of late because of some predatory practices. Check out your country’s regulations, potential regulations, and general opinion toward cryptocurrencies before enacting your startup.
It would also be great for the entire crypto community if all startups refrained from malicious ICO behavior. The startups that are acting as such are prompting governments to respond with ICO bans and other harsh regulations and are making it difficult for startups with better intentions to get their projects going. Many startups have been suddenly shut down due to new regulatory practices, and it would be pretty terrible if your startup incited this kind of response toward others.
5. Advertise your project
Let’s be real though, to fund your startup you need to first advertise your startup well so people will actually know your organization exists.
Having a solid social media presence, blogging within the space, and speaking with others in the blockchain community is definitely a solid start to advertising your product. It is important to make your product’s purpose understandable and appealing to both those who have been in blockchain for several years and others just starting out in order to reach the broadest range of potential users possible.
Communicating through Slack, Telegram, LinkedIn, Twitter, Medium and Reddit are all good ways to get your message around internally. Reaching newbies doesn’t necessarily require articles in mainstream non-tech news sources. In fact, some of the most successful ICOs have raised their target goals and more just with articles on Coindesk, CryptoCoinsNews, and other blockchain-centric news sites.
Most importantly enjoy what you’re creating. Blockchain’s full potential is still relatively unknown, so make something cool and contribute to this process of technological discovery.