Why Traditional VC’s Aren’t Investing in Crypto and How milestoneBased Can Change It

Why don’t traditional VC’s tend to invest in crypto?

While quite a large number of venture capitalists have welcomed ICO’s (USV, Sequoia, Seedcamp), the wider VC space continues to view them with suspicion and hostility. As you can see in the graph, 2018 still remains the most successful year for ICO projects.

Venture-capital funding in blockchain startup companies worldwide.

Source: Statista.

There are particular reasons why VC’s are not in a hurry to put funds into crypto:

1. Investors don’t get any control. VC’s typically require a certain level of control over the business to ensure an expected return over a given timeframe. ICO’s, though, are structured especially to ensure that the investor does not have control over the organization’s use of funds.
2. Lack of investment mechanics. Traditional documents in the venture capital world make it difficult for venture capitalists to invest in cryptocurrencies and ICO’s. Yet, another issue is the lack of depositary services for cryptocurrencies. VC’s expect their funds to be held safely and securely. But if the key to a crypto wallet is missing, the money may be lost forever.
3. Consolidated decentralization. Decentralization is the foundation that the crypto industry stands on. True, most projects genuinely start from the premise of building a decentralized system. But if the P2P model is really that effective, businesses will come into play, and the market will turn into B2C. This means that some large players will gain more control over a network, which is happening right now with Bitcoin mining.

All of the issues described above raise doubts among VC’s. But what if they could invest systematically, making smaller contributions than they used to but in a safer way?

milestoneBased to the Rescue

Leveraging the benefits of an escrow smart contract and DAO, we’ve crafted a multifaceted platform for venture capitalists, limited partners, such as family offices, high net worth individuals, institutional fund allocators, startups, and startup advisors. All of these parties can now collaborate on one convenient, intuitive platform.

Our roadmap design tool helps all the team members stay updated while keeping existing and potential investors in the loop. This way, investors will have more control over their funds and start-ups will be motivated to reach their goals even faster to receive the proper funds for the next milestone.

If a company is not performing well early on, or in the case of any malicious behavior, milestoneBased provides full transparency on execution so that investors can identify suspicious activity. VC’s can also exchange project tranche funding based on the project’s progress on its KPI’s and roadmap execution.

Smart Contract-Based Shield for Your Investments

milestoneBased helps both investors and startups use funds smartly and effectively and even provides tools that managers can use to track a project’s success.

Since the community, or fund holders, controls how the platform is run, changes are voted on via protocols for each particular project. That being said, milestones or roadmaps cannot be influenced by one person alone.

Explore the benefits of our platform:

• Control over expenses: Investors can significantly impact a company’s decision-making process, bring proposals, or shut down a milestone or roadmap.
• Decentralization: There is no singular person with full control over a milestone/roadmap as the authority is distributed among all holders.
• Access to knowledge base: Business memos are available for viewing by each team member and can be used for learning and reinforcing the team’s performance.
• Straightforward interface: The system is designed to offer user-friendly functionality with its intuitive interface and vast capabilities. Available from anywhere, on any device, through a secured cloud-based environment.
• Data integrity: Blockchain-secured and tamper-resistant.
• Transparency on execution: Roadmaps are guarded by voting protocol or timelapse.

Finally, VC’s have a tool for systematic investing, and crypto startups have incentives to move forward faster. milestoneBased alters the collaboration between VC’s and crypto startups by delegating control over expenses, execution, and performance to smart contracts.

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