Startup Finance and Crowdfunding is Changing

Looking at the new systems sprouting around the world these days financing of new ideas and teams is rapidly changing. Yesterday projects were financed using banking methods and corporate structures that date back centuries. The few people who have access to the right connections reaped the rewards while the rest worked twice as hard.  But now a new era in organizational structures is upon us.

According to Dominik Zynis, Marketing Advisor to WINGS, “A few years ago while working on a project that provided a technology for the first ‘crowdsale’ I saw MaidSafe be the first to raise several millions in Bitcoins, now a week doesn’t go by without a similar event. Bitcoin is the ultimate global idea crowdfunding platform.”

Not only is the blockchain sector a breeding ground for new disruptive ideas to take flight, but it also offers the prospect of a new economic order.  It offers a vision of a future where everyone has access to economic opportunities, and wealth from work, knowledge and innovation can be distributed and not held tightly by just a handful of corporate investors.

A lot of these projects, however, don’t fit into the normal crowdfunding box and there is no control, even with regulations, to help people get input if a project has a chance to succeed.  Goldman Sachs and Merrill Lynch certainly are too old school to start covering coins.

Initial Coin Offerings (ICOs)  are commonplace nowadays, but it is often impossible for the community to know if the project is worth supporting due to the lack of technical knowledge or research required, and it’s not unusual for investors to be left holding a bag of worthless shares or coins. Recently, a project out of the European Union raised well over $10 Million simply based on the premise that ICOs thus far have been huge money makers for early participants, and intends to provide an easy system for managing a coin index fund.

A platform called Waves, with its token being the “fuel” used for all operations, aims to be a decentralized Kickstarter and an instant and decentralized asset-to-asset exchange, supporting other cryptocurrencies like Bitcoin or Ether and national currencies like EUR, USD, YUAN at the same time. Assets can represent services, stocks, real company shares with a built in dividend system that allows a company to make payments to investors with a click of a button in any currency, domestic or digital.

Another firm is called Funderbeam which is a blockchain based stock market for growing startups. It allows them to get the funding they require to develop and it allows users to research and invest on their favorite projects. Funderbeam provides tools for users to easily research investment opportunities before investing in a startup. Furthermore, Funderbeam will conduct a search on any previous investors a startup may have and drafts a shareholder’s agreement for investors.

Another platform called WINGS is a decentralized kickstarter that also offers project governance. It allows anyone to submit projects to the WINGS community which will then review them and forecast the success rate of the project and the amount of financial support it can gather. The system allows people to focus on innovative projects and to eliminate unworthy proposals without any central authority dictating which projects are good or bad. Furthermore, everyone can participate in the forecasting and is encouraged to do so due to the incentives built into the platform. Startup enthusiasts that do not have the necessary knowledge or experience to forecast a project’s success can delegate forecasting powers to more experienced users, and contribute to a project’s success via a decentralized task bounty system.

Blockchain technology brings about new and easier ways for ideas to be turned into fully developed projects, including platforms that facilitate crowdfunding and asset issuance. Few platforms, however, focus on providing the necessary tools for due diligence to be performed by the investors. Additionally, new concepts like swarm intelligence and other tools are changing the way we perceive project funding and management by introducing a decentralized web of insights into decision making processes that used to be controlled by executives giving other project stakeholders a voice.

Thanks to blockchain technology and the freedom cryptocurrencies provide, new projects, that may not have been able to take off anywhere else, have come alive following the support of an global community of crypto-investors, and new opportunities for making money are no longer locked up in the vaults of pedigreed Wall Street and London investment houses.