How Do We Bridge the Gap between Investors and Startups?
Despite the Covid-19 pandemic, close to 5.4 million startups were launched in the USA over the last year. These are impressive numbers, even for the most start-up-friendly country in the world. Yet, while more and more startups pop up every day, the iron law of startups commands that 90% of them will end in failure.
Talking about a wet blanket.
Why does this happen? The reasons are varied, but according to the startup failure post-mortems, there is rarely a single reason for a startup’s failure. It is a combination of several missteps such as failing to fit into the targeted market, a flawed business model, and blowing the budget.
It’s no different in the crypto-verse — the draw of the novel technology and the promise of quick digital bucks hurt both the investors and the enthusiasts behind these projects. The stats say that the majority of these endeavors fail due to the lack of the market’s need for their services and products and because they ran out of cash.
How can you navigate these obstacles and live to tell the tale? Read on to find out more!
Why the Majority of Startups Can and Will Fail?
Building a new startup is no small feat and requires you to juggle as many plates as possible. What are your costs? Where will you secure funds for your startup? What will your monthly cash flows be like? What’s your value proposition for both the market and the investor?
So many questions, so little time to get all the right answers before making that essential first step.
First, you need to try to come to terms with a fundamental truth: launching a startup may seem cheap at first, but it’s a deceptive and potentially dangerous perception that has sunk many ships.
Just consider this — until you start generating positive cash flow it will need to raise sufficient funding or it will simply sputter and go bankrupt. Data shows that more than half of all startups apply for financing, but less than 30% percent of those who applied were approved for any financing, which is a startling failure rate.
Also, even if you succeed in securing the funds, how do you tackle other issues such as planning, lack of demand, knowledge and skills gaps, unexpected costs, low productivity, inefficient marketing, all at the same time? This list goes on indefinitely, while you burn through precious funds trying to make sense of what went wrong and, equally important, when.
Is there a solution?
Yes, but you’ll need every helping hand available to make this work, even small-time or novice investors that have been waiting just for your project to try their hand at making it big.
In other words, the more investors you get to your side, the easier time you will have in securing more financial freedom to deal with the issues essential to keeping your startup afloat.
But, how do you recruit these valuable fellow travelers on your journey?
Cutting the Fat with Investment Opportunities
In a way, most of these dilemmas can be summarized under a single question — how do you find a market that wants to pay for your solution if they are not even sure that they need it? Ultimately, it all comes down to curating what can work and what isn’t worth a minute of your time when it comes to an investment project.
Is this really a tall order?
No, it’s not, as long as it’s done with professionals willing to dedicate their time to separate the sheep from the goats for both the large-scale investors and the average Joe looking to try their hand at hitting crypto gold.
How do you find these?
Technology can help you a great deal and the crypto space is still the most democratic one when it comes to drawing both big shot and small-time investors alike. They can easily become a part of the same ecosystem, no matter what they hold in their crypto coffers.
To make this work and protect each potential investor as well as select only the best startups and projects for funding, this ecosystem would have to implement several key features:
· Smart anti-whale measures
· Investment security
· More democratic access to financial opportunities for all users.
Let’s look into these issues in more detail.
Bitcoin whales are harmful, period. To get rid of these, every sighting of an investor with a disproportionate amount of cryptos under their belt is a cause for scrutiny. Maintaining financial balance is essential and each individual that has the potential (or intent) to try to disrupt the delicate balance of an ecosystem that promotes equal investment opportunities should be shown the door ASAP.
Why do we insist on the anti-whale policy? It’s simple, we want to protect the investment of each participant and the chief enemy of every investment is the lack of stability.
This instability is often caused by market disruptions, damage to the liquidity or value of a particular asset, among other things. This usually happens if a whale suddenly pulls the rug below every other investor’s feet once they decide to leave a particular project. This creates ripples whose negative effects often bring down a perfectly sound idea for their short-term gains.
So, to provide comfortable space for each investor, average Joe included, accommodating a financial whale is not only a physical but an ethical issue.
…And Investments for All
Now that we have cleared that one, let’s look at how we can democratize access to investment and financing opportunities for all user profiles.
So, how can startups tap into enormous funding potential from investors such as your average Mr. Joe?
While startups are trying to come up with something that’ll invite these average Joes to invest, the investors themselves are facing their own set of challenges with so many fake identities and fraudsters around.
At the same time, performing due diligence can be a tediously complicated task for the majority of small-time investors.
How can they be sure that the management team can execute the idea they’re selling? Do they understand the targeted market? What is their main motivation? What will their capital be used for? How can you identify red flags of fraud and should you carry out your own in-depth due diligence or hire a professional?
This brand of fear works both ways: average Joes are looking out for startup scams, while startup entrepreneurs are struggling to avoid getting scammed by fake investors.
So, how do we make their interests align?
First, the goal is to lower the investment bar for each investor profile, at no expense of the quality of the project. In reality, serving the common person just as a major venture capitalist allows for the healthier circulation of both ideas and liquidity, strengthening the draw to invest in crypto-based projects among the more skeptical mainstream.
Putting the average Joe in the role of both an investor and a startup launcher no longer depends solely on the quantity of gold in their coffers. By curating the projects we want to support, we can make it easier to take part in them, no matter the level of experience or expertise of the participant.
We also want to leave no man behind when it comes to anyone’s potential to invest in something that we deem likely to succeed. Investing should not be a rich man’s game and by leaving this door as wide open as possible to many, we help more people tie their fates to a particular project without having to rely on middlemen with questionable agendas.
One more thing: it’s impossible to predict the future of each and every project. But we do want to stack the odds in your favor and choose only the most viable projects for as many people as possible.
Security for Prosperity
For us, the curation does not only mean evaluating each project for its capacity to improve the bottom lines of the participants, but also minimizing the possibility of endangering the investment of each participant in the ecosystem we are trying to build.
Now, we are aware that the crypto-verse is populated with numerous malicious actors who hurt both the mainstream adoption of the technology we are promoting and the reputation of the projects that come out of it.
This is why we promise to devote much of our resources to rooting out fake identities and fraudsters with the help of due diligence and thorough checking of the credentials of both the people and the projects behind them.
By putting checks and balances in the project assessment and incubation process, we also put back the accountability and honesty to the world of cryptos. As stability has become a rare asset in today’s casino economy, we want to provide you with a platform whose core operational tenets will remain unchanged once agreed upon by the voting community.
LitBit Finance is a crypto investment platform with a mission to resolve all of these issues with a single swing. First, we want to help startups and investors bring their visions to life with the help of a project curation system that emphasizes quality over quantity. At the same time, the quantity will also help us deliver quality and lower the bar for participating in the projects we choose to support for both experienced venture capitalists and small-time investors and startups alike. All of them will enjoy the same level of investment protection and security as our pledge to maximize an investor’s exposure and minimize the inevitable risks.