Blockchain is one technology that has certainly impacted almost every industry. And the Venture Capital Industry is not behind.
Blockchain technology opens up extraordinary and profitable investment opportunities for entrepreneurs. At the same time, blockchain technology has the potential to revolutionize the Venture Capital industry. The technology can provide a more transparent, creative, and effective way of conducting business. That’s why it’s so significant for venture capitalists and other investors to take note of blockchain’s potential.
Blockchain is still in its early stages but it upends the venture capital industry in a number of ways.
Blockchain has not only opened up new avenues of investment for investors in the Venture Capital Industry but at the same time it has also paved the way for existing businesses to integrate their current products and services with Blockchain.
The benefits of blockchain technology for Venture Capitalists and the Venture Capital Industry
For a venture capitalist, Blockchain technology has the potential to be that next big thing.
What is blockchain technology? Blockchain technology is a decentralized (self-sustaining, robust ecosystem that is independent of any one entity) database that stores information on a network of computers. This information is safe and cannot be tampered with.
Blockchain technology has many advantages for venture capitalists and the Venture Capital industry. Here are some of them:
- A new ecosystem of founders
The most apparent reason blockchain technology matters to venture capital is the fact that it’s a significant part of many of the new startups that are springing up. And each of these new blockchain startups depicts a potential new investment for venture capitalists
- Increased transparency
Blockchain could also influence the venture capital industry by making it more understandable. Currently, there is a lot of obscurity in the venture capital industry. Startups usually have to give up a lot of equity to lure in investors and it’s not always obvious where the money is going or how it’s being used. With blockchain technology, all of this could be made transparent on a public ledger. This would give investors more perception of how their money is being used and it would make it easier for them to track the advancement of the startup. By making transactions more transparent, blockchain technology can help Venture Capital firms build trust with their partners.
- Competition from new funding alternatives
New startups and established companies are able to launch new tokens and raise money through initial coin offerings (ICOs), and this new path to market could present an attractive alternative to traditional venture capital funding.
With blockchain, startups could raise funds through ICOs. ICOs are comparable to IPOs (initial public offerings) but rather than selling shares of the company, startups and established companies sell digital tokens.
- Faster transaction times
With blockchain, Venture Capitalists can instead invest in tokens that characterize a stake in the startup. This will give them a more direct and liquid way to profit from the success of the company.
- Tokenization
Through tokenization, blockchain technology allows the tokens that represent the project or startup, to be decentralized. That means investors will no longer have to depend on a specific financial service provider to make sure that they are selling the company shares or store assets. It also gives a choice to investors to move and hold their assets more freely.
All in all, blockchain is a game-changing technology for the venture capital industry, as it is considered a blessing for venture capitalists because it will create an atmosphere in which there are vast rewards available to those who are at the top of their game.
Entrepreneurs, investors, and some venture capitalists who are used to conventional financial systems may find blockchain-based transactions confusing, so it’s recommended to work with a firm that can advise and help with Blockchain related issues.
Contact your Damalion expert to setup your Blockchain investment fund, Crypto investment fund or if you would like to raise funds for your Web 3.0 company.
