Despite the bear market, the crypto sector is increasingly dominated by venture capital firms. However, there are some lessons that can be taken from this paradigm shift.
There are a couple of pros and cons with the venture capital dominance of Crypto Startups and VCs. Let’s discover the most important ones.
Understanding The Crypto Startups World
On the positive side, it shows that this technology has a lot of potential for the future. These huge firms and institutional investors would not put their money into something they didn’t believe in.
On the negative side, when a VC firm controls an important amount of tokens from a crypto project, that goes against the decentralization of the project. Furthermore, this will also put them in control of the future direction of the project.
For this reason, on July 12th, crypto industry observer ‘Covduk’ said that understanding crypto startups and VCs will give you an edge.
Crypto is made up of startups & VCs
Understanding them will give you an edge.
Here are 8 lessons from the Startup World 🧵
— Covduk (@Cov_duk) July 12, 2022
Eight Lessons to be a Better Crypto Investor
Understanding these crypto startups could make you a better investor and there are 8 lessons, he proposed.
1) Lean Startup Philosophy
This is a more recent way of thinking in the startup world, addressing a flaw in the approach to building. Many builders aim for the ‘perfect product’ before marketing it. Furthermore, their image of perfection is often wrong as it is built for users. Researching, talking to more knowledgeable people, and constantly adapting is the first lesson.
2) Customer Discovery
This relates to the lean startup philosophy and involves talking to potential users. Narratives change fast in crypto so startups have to keep up with the pace and learn from them.
3) Networking
Networking is key to success as knowing the right people can open doors early, he advised. Reaching out and setting up calls can make a difference.
4) The Power of Leverage
Along the same lines as networking, talking to new people can create groups of interconnected individuals. These can be leveraged into opportunities.
5) Set up Small Tight Knit groups
Setting up small groups of like-minded people sharing mistakes and learning from each other will help immensely.
6) The Team
A team can make or break a crypto project, he stated. “VCs would rather bet on a good team with a bad idea than vice versa.”
7) Held Together by Strings
There are always problems to fix with a new startup. Good projects fix things as they go so investors need to be aware of what is going on behind the scenes.
8) Being Dynamic
Crypto is an ever-shifting ecosystem. Therefore, startups need to keep moving and improving. Old trading strategies may not work and narratives change.
Conclusion
As you can see, there are many things that every crypto investor needs to keep in mind to be successful in this field. Maybe more than other investor niches thanks to its high volatility.
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