More and more startups are choosing crypto funding instead of the normal banking and investors route. There are many advantages: It’s fast, global, and, most importantly, cuts out the middlemen.
But it’s not all as smooth as it seems—let’s examine the pros and cons to help you make a clearer picture!
Crypto Funding Gains Momentum
Gone are the days when your only options were bank loans or looking for a rich investor. Now, crypto funding has made a big step forward. It’s quick, borderless, and makes it easier for entrepreneurs from all around the world.
In 2017, Initial Coin Offerings (ICOs) exploded, startups raised billions, and it seemed like everyone could easily get rich. The hype has cooled since then, but it’s still very much alive.
These days, you’re more likely to hear about Security Token Offerings (STOs) or Initial Exchange Offerings (IEOs), but the main idea is just the same.
Pros of Crypto Funding
One of the biggest pros of crypto funding is control over your assets. Investors often want a say in how you run things when taking the usual route. With crypto, you can raise your funds without giving up control of your company. Managing all your funds through a crypto wallet gives you full control over your assets and gives you more freedom of choice.
Speed is another big advantage of crypto; as usual, funding can take months. But with crypto, you can go from idea to beginning in a matter of weeks.
Accessibility is something we cannot miss, with crypto funding opening its doors for all entrepreneurs who might struggle with other routes. If you don’t have a perfect credit score, it’s no problem as all you need is a solid idea and that you can market it well.
The global nature of crypto is a massive plus. Your pool of potential investors isn’t limited by geography or anything similar—someone on the other side of the world can invest in your idea with just a few clicks.
Cons of Crypto Funding
Now, let’s discuss the issues you might face when choosing crypto funding. The legal field is big, and all those regulations are still being developed, and they can vary from country to country.
Going through this legal minefield can get pretty tricky sometimes. You might need to ask for help from some serious legal advisor to ensure you’re not breaking any laws.
Volatility is considered to be the biggest concern. The crypto market can move up and down in very short periods. One day, your funds might be worth a fortune; the next, they could be worth just a fraction of that.
Credibility can sometimes be an issue, too. Even though crypto is widely accepted worldwide, some people still view it suspiciously. This skepticism can make winning over customers, partners, or regular investors harder.
Practical Advice for Crypto Funding
If you decide to take the crypto route, you need to come prepared. First, get yourself a safe wallet, as a good wallet can save your assets from fraudulent activities.
Education is the most important thing, and with the crypto industry moving so fast, staying informed is crucial. You need to understand the tech behind it, keep up with the latest market trends, and stay on top of regulatory changes.
Consider using stablecoins for at least part of your funding, as these assets are designed to keep the value strong and stable, often pegged to a fiat currency such as the US dollar.
Don’t forget about taxes, though. Crypto’s tax implications can be complicated and vary by jurisdiction. It’s always wise to consult with a tax professional with extensive crypto experience.
Moving to Crypto Funding Is Part of a Much Bigger Trend
Crypto funding is part of a much larger change in the financial sphere. Blockchain technology, which underlies most crypto assets, already has the potential to forever change many aspects of business and finance.
The big crypto community is another major factor you should consider, as while you’re part of a passionate and advanced group, the team’s always pushing you over the boundaries of what’s possible.
The Takeaway
Choosing crypto as startup funding is one of the simplest options, but it’s not perfect. It offers high speed, accessibility, and worldwide reach that the usual funding methods can’t even match. But it also comes with a dose of risk and challenge.
Before starting anything, you need to have at least a solid plan for managing the risks. Most importantly, you need to always be prepared for a wild ride, as the crypto industry moves so fast, and you need to be ready to follow it.
Photo by RDNE Stock project; Pexels
