When starting a new blockchain startup, it is very rare that the founding team has everything they need – be it business infrastructure, technical knowledge, marketing expertise, money – to be successful.
While some businesses will be successful, it often takes many mistakes, mistakes, and recoveries before they find their way. In cases like this, that mentor is needed to help the start-up find its way.
Yoda, Mister Mayagi or Morpheus, that calm and intelligent voice can lead a startup to greatness.
But how can startups find their mysterious mentor figure? and how can they find one All What skill set do they lack? And while we’re at it, does that advisor have a wealthy friend who wants to invest?
There are strong differences between:
- Transforming the “behind the napkin” design into a Minimum Viable Product (MVP)
- Building a Scalable Business Around a Proven Innovation
- And finding investors who are willing to take the risk of partnering with you.
Let’s take a look at the role of blockchain incubators, accelerators and VCs. Let’s look at what the solution to each problem is and how they benefit.
Then let’s look at some emerging hybrid models that are specific to the needs of blockchain-based startups with models such as the Cronos/Particle Bee Grant Program, with an active ecosystem of partners and a live series ready to welcome graduates; and Cryptix’s “Venture Builder,” which takes a keen role as a co-founder of the startup.
traditional structures
There are three traditional structures helping a company from initial idea to operating (and sustainable): Incubator, Accelerator, and VC. Each solves a different problem, has a different timeline, and can increase a startup’s potential for success.
hatching machine
With such a clear term, it’s easy to guess that an incubator wants to start early, “the egg hasn’t hatched yet”.
At this stage, depending on the company’s capabilities, the complexity of the product, and at least “Eureka” luck, it can take anywhere from a few months to several years as teams gradually design, develop, test, fail, modify. and improve their product until they successfully develop a working MVP that demonstrates the core innovation they are working to bring to life.
The role of the incubator is to understand the goals and talents of the team, and guide them through various exercises, lessons, and proven technology development methodologies, until they have an MVP and a plan to further test/refinement this into a true product. Don’t be
The incubator may be promoted through a non-profit organization with the mission of creating economic growth or may choose to offer its services in exchange for a percentage share in the business.
While they could also charge fees directly, most startups that require incubator services do not have large amounts of capital. In many ways, paying with a business cut gives incubators more incentive to help startups succeed, with a “if you don’t succeed, you don’t get paid” mentality.
accelerator
This partnership happens much more quickly – about 2-3 months is typical and can take many forms, one of which is a series of workshops the team has to complete in between (usually with support available) accelerator).
Unlike an incubator, where the product may be in its early stages, or have some development but lack an MVP, an accelerator typically works with startups that have a functional product, a business unit and (hopefully) ) are the initial customers.
They have passed the rewarding milestone of where one actually wants to pay for their product. However, many blockchain startups have more technical knowledge than business modeling skills, and startups have an accelerator to work with:
- Develop the necessary infrastructure in the company so that it can stabilize and expand
- Conduct necessary market and branding research to find a key market and position accordingly
- Develop a roadmap to grow the business, with strong growth goals and clear paths to meet them
An accelerator is given the same incentives as an incubator, where it may be a non-profit organization, but will more likely agree to a certain percentage of the business in exchange for their services.
Fees at this stage are likely to be higher than at the incubation stage, but some form of percentage stake in the company is usually involved.
Venture Capital Firm (VC)
VCs usually enter the picture when a product has shown strong promise and is ready to move out of the garage/cellar/coffee shop/parent’s house.
This type of scale-up takes real money, and startups are usually at the point where they have strong momentum, but it is clear that without proper funding, the momentum will slow down and stall.
VCs provide the company not with guidance and practical support (usually), but with money. It’s a lifeblood for the company to scale up and make the necessary investments at an increasingly large scale, and big enough to start maintaining a revenue business well before VC funding runs out.
The VC period for a company can vary depending on the demand for the product, but a quick turnaround in the fundraising round can include pitching the company/product, negotiating money for stock/tokens/etc. and distribution is included. Funds.
Hybrid Approach
While each step in the process may be exactly what startup requires, there is an obvious problem. There can be gaps between each phase, and potential continuity is all but lost as the startup deals with different groups for each phase.
Perhaps that’s why there are a growing number of innovative hybrid models that serve to close the gap, maintain consistency, and develop more involved partnerships during the company’s early stages.
Cronos/Particle B Accelerator Grant Program
This innovative model of Cronos/Particle Bee seems like a simplified mashup of incubator/accelerator at first glance, but is actually a holistic program that ends with an opportunity for startups to go live on the larger Cronos ecosystem.
Grants are assessed through an application process that includes thorough due diligence, an interview, and, if accepted, cooperation in setting important milestones and signing contracts.
The Cronos/Particle Bee team helps grant winners through the incubator and accelerator phases, depending on where they are at when they apply and the ability to connect the team to VCs.
This process creates cohesion that is better than most other programs, but the programs shine because they guide teams with the aim of helping them develop a quality platform, and then help them integrate into the larger Cronos ecosystem. We do.
Having this concrete goal helps accelerators and VCs step in because they have an approved onboarding plan, and helps eliminate the major failure points that doom many startups.
venture builder
Cryptix has developed a program that is in many ways just a collection of incubators, accelerators and VCs, but on a deeper level.
Their “Venture Builder” program can last 2-5 years, and the Cryptix team plays an active, sometimes daily role, helping startups grow and launch.
While this takes a lot of resources from the team, their business model requires that they have a significant “co-founder” stake in the startup, which can intimidate startups that want to retain control of their platform.
final thoughts
Blockchain accelerators, as well as first incubators and later VCs, are designed to do one thing: improve the odds of success for a promising startup.
While the developed models are replacing the traditional process, their goal is very similar. However, with a mentor figure from start to finish, including a very enviable established on-ramp, startups who have really great ideas and a talented team have a never seen before startup experience.