New Crypto Company Survey Reveals How Blockchain Startups Are Surviving the Bear Market
The crypto market crash that occurred in January 2018 has marked the start of a crypto winter that has lasted for over a year at this point. As such, it has affected numerous aspects of crypto and blockchain industries. Further events such as the crypto world abandoning the ICO trend and failed attempts to regulate the space did not improve the situation either. But, with all that said, how much did the crypto winter affect crypto-based startups?
For the most part, startups have stated that they did not experience major setbacks regarding their product roadmap. While they still feel affected by the bearish market, the situation has not been bad enough for the projects to be abandoned.
One of the best strategies of successful startups has been to avoid ICOs. While coin offerings proved to be a quick way to get investment money during the rally, it is not wise to build the entire project based on the money which can be affected to high volatility. Instead, many of these startups decided to turn to traditional fundraising and get their funding in fiat currencies.
Livepeer is one of the best examples, as the company kept its money in fiat at all times. That way, when the crypto market crashed, the company was not affected, even if the entire ecosystem of the space they are working in did.
While the traditional methods of fundraising may appear to be the best option, there are also numerous startups that survived even after raising money via ICOs. The founder of a trading company Altonomy, Ricky Li, stated that he advised ICO clients to liquidate enough Ethereum to be able to run for at least two years, just in case something happened to the market.
Those who listened to his advice managed to avoid being affected by the market, while the others are either out of business already or struggling to survive in current conditions.
Another advice that Li gave was to move ETH into crypto indices. That way, they would not be exposed to a single asset. There are other precautions that some ICO-based startups made in order to ensure their survival if the worst comes to pass, and this way of thinking is what allowed them to continue growing and developing even during the crypto winter.
Some of the projects have been around for a long while, and they even got to feel the previous bearish market. Because of that, they were prepared for handling the next one, even if it takes years for the bears to loosen their grip.
The smart treasury-management plan appears to be one of the key factors in surviving the crypto winter, and projects that realized this early are the ones that are still around today. The only other way for them to keep their core ideas alive is to merge with other companies and join forces in order to achieve success. This may lead to combining ideas, improving user experience, and increasing companies' chances of surviving the crypto winter.
Developer Hiring During The Crypto Winter
When it comes to the employers' market right now, many of the startups stated that their bargaining position has improved during the crypto winter, especially when it comes to hiring new blockchain engineers. Projects that have failed due to the crypto winter have left a lot of talented developers available. As a result, successful startups can find the best talents currently available and grow their businesses further. This is something that many corporate giants did back when they were starting off, including Amazon and Google.
Meanwhile, while most companies claim that hiring is easier since people are in need for a job, there are also many talented developers who have become skeptical of crypto and blockchain technologies due to a bad experience. Even if they were optimistic about these technologies when they started working, the crypto winter placed them in a difficult situation.
Cutting The Unnecessary Losses
Another practice that a lot of companies have deemed necessary is to reduce their losses wherever they can. Because of this, firms have decided to reduce the number of events that were originally planned, as well as expenses regarding public relations. Company 0's Marco Peereboom, for example, stated that traveling around to meet small audiences is currently a waste of time and money. Peereboom is not the only one to have come to this conclusion, as numerous startups' officials have mentioned having similar issues.
Some firms have even opted to cut back on PR firms and other contractors. And, while they are trying to save up by not spending, they also had to dismember internal teams that are not crucial for the company's current goals.
Despite the fact that going long on ETH is typically a bad idea when there are indications that the crypto winter might arrive, some companies have decided to do it anyway. However, unlike most, they are somehow still going today. Some of them have introduced minor changes to their original plans, but they are still around, conducting their business.
One example of this is the Bee Token, which is seen as one of the Airbnb competitors. The company is currently gaining revenue via traditional fees, while they gave up on their original plan, which was to grow via their token value.
Others turned to smart contracts to provide their backers with more power, although the consequence of this is that their flexibility has been reduced.
What To Expect In The Future?
After an entire year of a bearish market, many have started noticing similarities between this market crash and the one that struck in 2014. One of the largest differences is that ICOs managed to raise a lot of money before the crypto winter, and token sales even continued after the crash. Some platforms also have plans to hold token sales in the future, when they decide that the time is right.
However, even when the coins end up generated, there are other troubles that will follow, such as deciding when to push for token listings. While the platforms and startups depend on their coins in order to build a community and continue their development, if the selling pressure ends up being too high, it might have negative effects on the entire project.