If you’ve been monitoring the crypto market for a while now and believe in the potential of this industry, it may have even crossed your mind to launch your own crypto startup. This is only natural, especially in today’s world, where everyone seems to start a side hustle. Besides, the crypto sector is thriving, and with so many people interested in how to buy shiba inu and other exciting crypto projects, it only makes sense for you to want to capitalize on the opportunities. But of course, there’s more than meets the eye when it comes to running a business, and even figuring out the basics of starting it can be challenging. In this blog, we aim to help guide you in the right direction, so that your dream won’t crumble in the face of obstacles. Read on!
Conduct market research
One of the most important things to do before launching your crypto business is to check if there is a need for it – and this is true for any other type of startup. To this end, it’s essential to conduct market research and find out what the industry trends are, what the business landscape looks like in crypto, what the unmet needs of customers are, who your competition is, and what kind of product people are looking for. It’s essential to take the time to learn this information because otherwise, you risk becoming just another business among the 90% that fail.
If done well, market research can lay the foundation for your crypto business, helping you narrow down your niche, identify your audience, and establish your startup’s identity (meaning its mission, vision, and brand, among other foundational things). It’s really important to do your homework from the very beginning so that you can have a smoother path.
Pick the right legal structure
When starting a crypto startup, it’s essential to choose a legal structure because it will impact liability, taxes, fundraising, and more. While there are many nuances when it comes to the legal structures and their suitability for a crypto startup, most businesses opt for one of the following options:
- DAO: a decentralized anonymous organization is a good option for those looking to build decentralized ecosystems, like DeFi platforms. But it’s worth noting that legal frameworks are still evolving, so this is generally a risky option;
- C-corp: This legal structure is ideal for larger startups that aim for significant funding, or want to go public or attract institutional investors. It also enables easier scaling and stock issuing;
- LLC: A limited liability company is suitable for smaller companies which look for personal liability protection, flexibility and pass-through taxation.
As you can see, these structures have unique characteristics, so it’s essential to do your research and take the time to make a decision thoroughly rather than rushing it, especially because choosing the wrong legal structure could have serious legal consequences and also hinder your growth.
Understand licensing and regulatory requirements
Entering the crypto business sphere means dealing with different regulatory requirements, and in many countries, the legal landscape for this industry is shaky, as its status is subject to constant reassessment. The legal landscape will be specific to where your business is based: for instance, an American entrepreneur will have to contend with the SEC, while an entrepreneur based in the EU should comply with the MiCA regulations.
Either way, make sure to assess your tolerance for regulatory bureaucracy when considering your niche. For instance, if you want to start a crypto exchange venture, it’s helpful to keep in mind that launching a centralized exchange involves more regulations than developing an earn-to-play NFT game.
Think of your funding options and whether you want to hire a team
The next step when it comes to starting a crypto venture is deciding where you will get your initial capital from. Your funding will have to be enough to cover development costs, licensing procedures, salaries, marketing budget, and other expenses, so make sure to consider these aspects. Generally, startups rely on angel investors or venture capital firms, but when it comes to crypto, there are better alternatives, such as Security Token Offerings and Initial Coin Offerings, allowing you to get funding from the crypto community. However, keep in mind that they come with complex regulations and unique conditions.
At this step, you also want to decide if you wish to go solo or hire a team. If you don’t want to run a business on your own, finding a business partner or employees is necessary to get your venture off the ground.
Set up an infrastructure for your business
Any crypto business needs to be backed by blockchain technology, so after completing the steps mentioned above, it’s time to find a technological blueprint for your venture. Consider what kind of blockchain you would like to base your project on, whether Ethereum, which is useful particularly due to its smart contract capabilities, the BNB chain, which offers cheap transaction fees, or Polkadot, which provides numerous development tools.
Of course, you can always create a new blockchain or fork an existing one, and if you decide to take this approach, you will also gain an advantage over other crypto businesses. However, keep in mind that such an ambitious undertaking would require development resources and a lot of time.
Build and validate your MVP
At this stage, theory merges with practice in your journey of running a crypto business. You need to create an MVP – minimum viable product- which should be your first version of the product, including just the main functionalities and features.
After this first release, there will be a period of ongoing refinement, where you will have to connect with early adopters and be open to their feedback and suggestions.
Be prepared for scalability and create a marketing strategy
Many startup owners neglect the importance of planning for scalability and regret it later. In the early stages of running your business, you may find it challenging to believe that your product could become so popular that you should ever consider scalability. But it’s always good to be prepared and plan ahead, as this will allow you to accommodate an unforeseen increase in demand.
When it comes to a crypto business, this could involve switching to a more efficient consensus mechanism, optimizing your codebase, and so on. Also, consider marketing. If you want to make sure that your business succeeds, you can’t simply wait; instead, you must let people know about it, and you can do this through social media marketing, content marketing, and community engagement.
The bottom line
Starting a crypto business is no easy feat, but if you take things step by step, it is doable. Just remember to stay open to the possibilities through this journey and be flexible. Don’t get attached to your first project outline—after all, crypto trends tend to move really quickly, so your plan could become obsolete easily. However, if you work on your mindset and cultivate patience, you will succeed in launching a thriving crypto business.