Starting a business is always a major challenge for new entrepreneurs. This is especially true when it comes to funding your startup. Of course, you need a lot of capital to develop and launch your business, but you also need a lot of funds to sustain your startup until it starts making revenue and profits.
A lot of new entrepreneurs never take this little fact into account, which is why 29% of startups ultimately fail. Nowadays, it’s a bit easier to find funding for your startups than it was before. You have various options, such as bootstrapping, crowdfunding, investor aid, loans, etc.
What’s interesting is that modern technology can also help you fund your startup. This technology comes in the form of cryptocurrencies. Cryptos are also known as “digital money,” and this funding method can greatly help your startup business if you’re willing to explore the possibility. With that in mind, here are a few ways to use cryptocurrencies to fund your startup.
Encourage Crypto Payments
Cryptocurrencies have generated a lot of attention in recent years. Many people rely on online transactions using cryptos to avoid fees and bureaucracy that are common in traditional payment options.
By encouraging crypto payments, you open up your startup business to a whole new group of consumers. Moreover, by accepting cryptocurrencies as payment for your products or services, you add yet another asset to your startup. Here are some interesting facts regarding crypto payments:
- Cryptos are decentralized, which means no middleman to oversee the transactions.
- Transactions are, therefore, instantaneous, seamless, and accurate.
- There are no transaction fees or transfer delays that are commonly imposed by banks or other financial institutions.
- Peer-to-peer transactions are verified by users within the blockchain technology.
Unlike fiat money, cryptocurrencies aren’t backed by a physical commodity, and they aren’t prone to inflation and global economic fluctuations. Instead, they are a digital asset, and their value may increase over time due to the increase in popularity and usage. That said, your crypto assets can be stored away for future use when you can increase your profits and give your startup a financial boost if it’s needed.
Another way to obtain cryptos for your startup is to mine them. Mining cryptos includes offering your hardware to help solve complex mathematical equations and record, as well as verify transactions. In return, you’re rewarded with cryptocurrencies for your contribution.
For example, the most popular and most valuable cryptocurrency to mine is Bitcoin. The best thing about mining is that you don’t have to use company hardware to mine them and thus slow down your business operations.
Instead, you can simply invest in the best Bitcoin mining hardware and leave it aside while it does its thing. However, this may increase your overhead costs, such as the electricity bill. These additional expenses won’t hurt your budget as the reward of mining cryptos can easily exceed the costs.
Any additional assets you can add to your startup’s budget will come in handy one way or the other. As mentioned before, you can save your cryptos for later use, trade them for items, such as equipment or trade them for services and, of course, cash them in immediately for profits. The choice is entirely up to you.
Create Your Own ICO
ICO (Initial Coin Offering) is a form of digital stocks. ICO in the cryptocurrency world is a rough equivalent to an IPO (Initial Public Offering) in the stock market. This strategy helps you attract investor aid that differs from angel investments or venture capital. In other words, you’re asking investors to invest funds in your startup that’s developing a new product or a service.
In exchange for their contribution, they are offered a coin or a token that might represent a stake in the company or its project, as well as a utility for using newly-developed products or services. Simply put, ICO is a form of digital fundraising activity. However, before you can launch your own ICO, there are a few things you must consider. Here’s an example.
- You need to purchase a digital currency and have, at least, a basic understanding of its use.
- You must also provide a digital exchange system and a digital wallet.
- Since cryptos are highly unregulated, you must convince investors that your ICO is not a scam.
- Write an in-depth and detailed whitepaper outlining your company’s goals and your product/service features and purpose.
- Provide 100% transparency into the project to investors.
- Tend to legal aspects to ensure your ICO is legitimate.
- Promote and advertise your ICO.
The point is to convince investors to aid you financially. The only way to do so is to convince them that your startup is the real deal, and you must also show that you have the potential to succeed and provide them with a return on investment (ROI). A lot of ICOs have yielded great profits to many investors, but a lot of ICOs turned out to be a scam as well. That’s why this endeavor can prove to be quite a challenge.
Promote Cryptos Through Your Startup
Like with everything else in business, visibility and awareness are keys to funding your startup with cryptos. That said, use every media channel you otherwise use to promote your startup to promote cryptocurrencies as well.
That way you’ll not just attract more customers, especially the ones who are more willing to use cryptos for transactions, but also customers who are willing to consider this new payment option for the first time. Therefore, here are a few channels you can promote cryptos on.
- Social media.
- Company website.
- Company blog.
- Content marketing.
The more exposure you create for your startup and cryptos the easier it will be to leverage cryptos to fund your startup.
Cryptocurrencies, although still in development, proved to be more than interesting assets in the digital world. Their use is versatile, and their decentralization makes them quite appealing. If you’re willing to give this funding method a chance, it will certainly open new doors for your startup business.