Investors are increasingly jumping on the blockchain train. Blockchain is expanding its reach into various markets, far beyond the realm of cryptocurrency that made it famous. Based on my experience as a venture capitalist, I believe VCs can and should play a larger role in blockchain innovation. We can help expedite the development of blockchain solutions by providing young entrepreneurs in this space with valuable resources, connections and mentoring.
Blockchain went mainstream when it became famous for its role in the cryptocurrency ecosystem. But it can do so much more.
Blockchain is a decentralized, digital public ledger that records transactions across a large number of computers. It’s like an advanced database with enhanced transparency—anyone can see the recorded transactions across the network, but no one can make alterations without changing all the subsequent blocks in the chain. This makes blockchain technology especially secure for transferring sensitive information and money.
It is currently being used in a wide variety of applications in industries such as banking, military, healthcare, entertainment, logistics and supply chain management. Blockchain is a fast, secure way to transport any type of sensitive digital data.
As venture capitalists, we have an opportunity to help facilitate this burgeoning industry’s growth. By providing blockchain startups with mentorship, connections and market access as well as capital, we can improve their pace of innovation and our potential ROI. Here are four ways I believe venture capitalists can offer value.
VCs typically have a wide swath of business experience in a variety of markets, and we can use that hands-on knowledge to help less-experienced blockchain founders find potential new uses for their technology. Finding projects that strike a balance between what is needed, what is possible and what the market will pay for is not an easy task. Experienced VCs can help founders find new opportunities and recognize early indicators of potential success.
Mentorship, strategic planning and operational guidance can make the difference between success and failure for startups. VCs tend to have the real-world experience under their belts to offer all three to blockchain founders. Holistic management support gives startups both the funds and the intellectual investment they need to grow. As investors, our goal should be to help startups not just survive but flourish, navigate challenges and seize growth opportunities.
For blockchain startup founders, it can feel like a Sisyphean task to build key partnerships that will help them break into the market. Well-connected venture capitalists can play the role of industry bridge, connecting startups with established companies, regulators and other valuable entities. These connections can help startup founders build relationships and gain validation, giving them access to customers and networks to fuel growth.
VCs tend to have wide, influential networks and understand how to gather the resources needed to make things happen. These two traits are critically important to the success of any startup. VCs can help connect blockchain startup founders with regulatory advisors, financial firms, trustworthy lawyers, marketing partners and other necessary pieces of the startup puzzle. It takes a village to scale a business. VCs can bring that village to the doorstep of blockchain startups.
As VCs, we play a special role in fueling innovation in the blockchain industry through our strategic investments. By supporting a wide range of blockchain projects, we can contribute to advancements in finance, supply chain management, healthcare, entertainment, education and more. Our investment choices aren't just about business. They’re about backing great ideas that have the potential to make a real difference in our world.
Who knows what blockchain startups can accomplish if they can accumulate the funds, resources and connections they need to continuously innovate. If you are considering investing in a blockchain startup, or any startup, remember that you have a wealth of assets to offer that go far beyond just capital.
(Copyright: Forbes How Venture Capitalists Can Support Blockchain Innovation (forbes.com)
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