Amassing the necessary capital for a business is not an easy feat. Getting the funding mainly depends on your ability to convince investors to buy into the idea. Generating wealth is even trickier through the traditional systems since capitalists will either want a piece of the business or outright reject your startup idea. Besides, the conventional methods are also effort-intensive and costly.
Crypto funding is a relatively new concept but increasingly attracting many entrepreneurs worldwide. Bitcoin is the largest and most popular cryptocurrency you should consider when seeking alternative funding for your startup. However, it has some intrinsic qualities that distinguish it from conventional currencies. The following article explores how to use Bitcoin to fund your startup.
Raising Funds through ICO
Initial Coin Offering (ICO) is a crowdfunding strategy that can enable you to generate capital for a business venture. It is like an IPO but not subjected to the lengthy vetting processes and regulatory restrictions of traditional financial systems. The essential element is the design of the project or startup that you intend to launch.
Raising funds through an ICO also requires proper planning to generate the necessary capital within the set period. You should design the structure of the startup and formulate a white paper to inform your investors what the project is about and the required capital. The white paper should also tell your investors that you will build your tokens on the Bitcoin blockchain.
Initial Exchange Offering (IEO)
Partnering with an established crypto exchange can also help you raise funds quickly and more efficiently than going around looking for investors. IEO is a process of raising funds by offering a token on an exchange platform. It is more attractive to startups because the exchanges already have an established market. Preview this website to know more about bitcoin.
However, sourcing funds through an Initial Exchange Offering requires you to find investors willing to subscribe to your products. Besides, startups must also register with crypto exchange companies. That means you must also be willing to pay the necessary fees levied by the exchange for the services offered. Most crypto exchanges usually take a percentage of the tokens provided on the platforms.
Using Your Bitcoin Funds as Collateral for a Loan
If you already have Bitcoin stored in your wallet or on an exchange platform, the funds could also serve as collateral for a loan. Using those funds to secure a loan could help you generate capital for a startup without selling assets. That offers you an even much more significant advantage since your Bitcoin gains value over time.
Leading crypto exchanges offer crypto-lending services as a way for them and their customers to make money. It works similarly to borrowing money from a bank to finance a startup but, you cannot trade the Bitcoin used as collateral before repaying the loan. However, crypto-lending is not subject to the strenuous verification and validation processes in traditional financial systems.
Accepting Bitcoin as Payment
You can increase your customer base and profits significantly by integrating Bitcoin into your payment systems. Unlike credit cards or bank transfers, Bitcoin bears relatively lower transaction fees, allowing you to reduce operational costs. Many global consumers increasingly use Bitcoin to pay for goods and services. Thus, accepting Bitcoin as payment also enables your startup to expand into new and emerging markets rapidly. Besides, it would also allow your startup to quickly attract the many global investors willing to support the development of the crypto space.
Cryptocurrencies are largely untapped sources of funding for startups. Nevertheless, Bitcoin offers several options for raising capital, with fewer risks than the traditional fundraising mechanisms.