The global blockchain technology market is expected to generate over $20 billion in revenue by 2024. The number itself is enough to encourage entrepreneurs to jump on the blockchain bandwagon. New-age founders realize the potential of blockchain technology in transforming businesses. If you are planning to start your own blockchain startup, the time is now. However, it is important to be mindful of the fact that 9 out of 10 startups fail. Therefore, you must understand the right way to start a blockchain startup to avoid liquidation.
If the sole motivation behind starting a blockchain startup is becoming a founder, the venture is destined to fail. Blockchain is a strictly technical industry with little room for complacency. Founders must focus on scalability and expansion to build a successful venture from scratch.
The Most Comprehensive Guide To Building A Blockchain Startup
Assumptions Testing: First and foremost, you must test your business assumptions. 42% of businesses fail due to the absence of market needs. Without testing your assumptions, you might be building a product or service that has no takers. Businesses use different models to test their assumptions. The most common model among blockchain startups is RAT (Riskiest Assumption Test).
The Riskiest Assumption Test follows the Lean Startup Model to test the feasibility of business ideas before the launch of the product. The model allows you to test your assumptions with minimum risk since it is still in the ideation phase. RAT helps you understand if your solution solves a real-world problem and whether it has any potential customer base.
Choosing The Right Business Model: Decision-making is one of the most critical components of a successful business, irrespective of the industry. Different business models serve different purposes, and as an emerging enterprise, you must choose the right business to ensure success of your business. If this is the first time you are starting a business, you can take the help of a renowned blockchain startup advisory to make the job easier.
While blockchain itself is a business model, we are entering a highly-competitive environment where the technology sometimes fails to provide business owners with a competitive advantage. Therefore, we require specialized enterprise business models to sustain and scale.
Most Popular Blockchain Business Models
P2P Blockchain Business Model: As the name suggests, the P2P business model is ideal for a peer-to-peer powered business. Any startup involving tokens, transaction fees, or BaaS can incorporate the P2P blockchain business model. You get an interplanetary system called IPFS with the P2P business model. You can also use the unused storage space in the mining software.
Utility Token Business Model: Token economy is at the heart of the Utility Token Blockchain Business Model. It is one of the most popular enterprise business models in the blockchain industry. Leading crypto startups like Ripple use the Utility Token Business Model, and the result is in front of you. In a utility token model, businesses use tokens to fuel the ecosystem while holding some tokens with themselves. A change in the market price of the token directly impacts revenue generation. This is why businesses adopting the model must have strong tokenomics before making the token public.
Blockchain As A Service Business Model: Blockchain As A Service Business Model (BaaS) is another popular enterprise model for blockchain startups. The model is ideal for testing new ideas as it facilitates experimentation and research. Microsoft Azure, Amazon Web Services, and IBM are some of the leading companies using the BaaS model. BaaS eliminates the requirement for hardware, and the companies adopting it need not worry about managing the blockchain. Instead, they can use solutions like Ethereum Blockchain As A Service (EBaaS) to build a solution from scratch.
Development Platforms: While blockchain as a concept is still evolving, developers are aggressively using it to develop new-age solutions. Development platforms like Hyperledger are the first choice of companies building a blockchain infrastructure. Such platforms facilitate rapid development and allow companies to serve customers by integrating blockchain and the cloud.
While there are several other blockchain business models, the aforementioned are the most widely used.
Economic Model: Finance is another critical component of any business. Thus, you must have a robust and resilient economic framework with a clear vision to sustain. From Governance to Tokenomics and Fundraising, economic modeling comprises several vital components. A blockchain startup is a cluster of several important functions. Factors like tokenomics, governance, and market demand play critical roles in revenue generation. Having a well-laid-out economic model is also vital to fundraising, as investors are interested in understanding how your business works from an economic perspective. To build an economic model, you have to answer a lot of questions like: “How will I make money?”, “How will I scale the business economy?”, “How to expand without incurring losses?” etc.
To get value, you must offer value. It is a two-way street. You generate revenue in proportion to the magnitude of the problem you solve, plus how effectively you do it. This brings me to the next important step to start a blockchain startup, i.e., Customer Acquisition.
Customer Acquisition Strategy: Customer acquisition and revenue generation are interlinked. 17% of businesses fail because users find it unfriendly. Therefore, offering value to customers should be your first priority. However, offering value alone is seldom enough to expand. Once you have a defined business model, the first step should be to secure customers.
Customer acquisition is a multi-step process that starts with identifying your target audience. In the age of the internet, there are multiple mediums that you can use to reach out to potential customers.
How To Acquire Customers For Your Startup?
Identifying Customers: As said earlier, identifying potential customers is the first step to customer acquisition. Understanding your customer base is very important to acquiring customers. One of the very helpful ways to do so is by studying the competitors and market trends. If you can pinpoint the struggles of your potential customers, you are already there. Customer demographics, interests, and other physical characteristics like age group further help in identifying your customers.
Defining Your Goals: Once you have your potential customers in mind, you can now focus on your goals and work toward them. Setting goals is critical to setting your revenue expectations. You must measure critical customer acquisition metrics such as customer lifetime value (CLV), customer acquisition costs (CAC), and monthly recurring revenue (MRR) to create a strategy for achieving your overall business goals.
Choosing The Right Customer Acquisition Channels: The blockchain industry operates on the internet, and therefore, you have plenty of options in terms of communication channels to reach out to your customers. You can start by devising separate strategies for different channels like Instagram, Twitter, Reddit, and Linkedin to enhance the customer acquisition rate. You need to dedicate substantial resources and efforts to content marketing, PR, and organic marketing to get your first set of customers.
Measuring and Improving Your Strategy: Dedicating so much time and effort to customer acquisition is a waste if you fail to measure your efforts. Measuring the performance of your efforts is critical to assess how well your strategy is working. It also helps you identify the areas you can improve. This is critical to redefining your strategy for improved outcomes.
Final Word
Before you start a blockchain startup, you must avoid some common pitfalls that may lead to liquidation. Starting your own blockchain startup is an ongoing process where you learn something every day. Therefore, it is important to learn from your previous mistakes and identify the areas where you can improve. Make sure that you offer a solution that solves a real-world problem or has a solid market requirement. That is the first step to guaranteed revenue generation. Also, it is important to learn from your competitors. Measure the performance of your business strategies and revise them to improve your results. With the predicted growth of the blockchain industry, the sky is the limit.