Who is to blame for the failures of the blockchain startups?

In 2017 the audit of digging Deloitte found that about 90 percent of the 26 thousand blockchainprojects that were started last year, is now inactive. Despite the fact that the technology of the blockchain continues to grow in the last two years, the fact remains: too much blockchain projects fail.

And the reason is not lack of money. Just last year, venture financing blockchain projects exceeded 1.3 billion dollars. The space is literally flooded with money, but the real problem lies in the fact that the model of bringing venture capital is fundamentally undermined. The hard truth is that besides money, venture capitalists do not bring any real value.

The blockchain has the potential to change the world, and now there is no shortage of entrepreneurs and startups, is able to propel the industry forward. However, much of this potential is not realized because startups don’t have the support they need to succeed. Before they are able to obtain the resources necessary for the development of the industry, it is important to diagnose the basic problem. Let’s look at what we’re dealing with.

Lack of attention

First of all, the model of venture investment is not working in case of kriptonyte because capitalists just don’t care about projects in which they invest. Most of them just pump money and sit waiting. In the traditional world of venture capital is just game theory: vbrosa money in dozens of projects, not understanding them one iota, and then just wait for some project to accurately shoot. That is all the focus on money, but not a drop of attention, not the fall potential.

Source: The National

This approach is absolutely not similar on what you need the blockchain projects. They need individual attention in order to successfully make the journey from concept to launch. Accordingly, venture capitalists need to more closely participate in the life of the project: to provide competent staff, to provide business counseling and educational materials. In a young industry that is forced to face several problems including lack of talents, obstacles to implementation and uncertainty on the part of regulators — project in need of any support.

Lack of special knowledge

Worldwide, there are 23 million software developers and 7.1 million JavaScript developers. Compare this to the number of blockchain developers at the end of 2018: more than 100 thousand. This is not a joke.

The new companies are not only forced to hire from such a small talent pool, but also to compete with corporations from the Fortune 500 such as IBM, Ernst & Young and Oracle. Not every developer will go to work in a startup with an uncertain future, if he is offered work for many years of the Corporation.

And although venture capitalists are willing to take the money in the blockchain industry, they lack proper experience in this niche. Therefore, they do not know how to assess the chances of project success.

Little speeds

Source: Unsplash

The technology of the blockchain is constantly evolving, and if a startup is swinging slowly, it will remain irrelevant.

A blockchain startups fail because their development takes too much time. It is important to feel the pulse and the time to produce a finished product, yet this impulse is not exhausted. Money can help start-UPS to begin with, but eventually they all fade. And this directly correlates with the time it takes from concept to final launch. If the first day had the engineering resources and experience, you could devote all their time to the actual creation of the product.

Looking ahead, we can say that niche need venture capitalists that bring in the industry not only money, but resources and experience. The fix for this undermined the funding model is crucial for long-term success of the blockchain. However, all of us as members of this community are responsible for supporting projects that move the industry forward.

In our cryptodata blockchain enthusiasts you’ll find lots of other useful information. And look in our Yandex Zen.

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