Surviving the Crypto Bear Market: A Five-Step Guide for Web3 Startups
Summary:
The article provides advice on navigating the recent downturn in the crypto market. It suggests evaluating the financial runway, engaging with the community, focusing on product value, refining the business model, and reconsidering marketing strategies. The piece underscores the importance of resilience and faith during bear markets, viewing them as a catalyst for innovation and revolutionary applications. Written by Abhishek from Polygon Ventures, the piece was published in association with Cointelegraph Innovation Circle.
As the crypto market experiences yet another bear phase, the perspective is significantly different. In contrast to the previous spell, major industry giants like Microsoft, Google, and Reddit are exploring Web3 products. Banks like JP Morgan and Franklin Templeton are experimenting with on-chain transaction settlements. All this arises amidst values going underwater and the future of Web3 startups becoming unpredictable as venture capital investments hit 2020 lows. Yet, bear markets, in spite of their unpredictability, have a silver lining. They sift out short-term speculators interested in quick profit-making and reinforce the foundational principle of crypto, a future that is decentralized, secure, and fair. Here are five feasible strategies to weather the bear market storm to finally emerge victorious once it fades.
1. Understand your financial runway: Assess your treasury balance and project its ability to meet expenses for the next year. Due to their volatility, it's advisable to have dollar reserves that would cover at least a year's expenditure. Have a clear understanding of your economic unit and ascertain whether your product attracts new users profitably. Keep your burn rate low and look for avenues where costs could be cut. Ensure your team has the right blend of skills to execute your vision effectively.
2. Connect with your community: Your community is a pivotal resource. They will assist in testing your product, provide honest feedback, help with business development, and more. If your product has a token, review its economic dynamics and try to optimize it to conserve value. If your financial runway is less than a year, consider exploring a bridge round funding option.
3. Sharpen your product value proposition: Determine what makes your product unique and actively promote it to users. Bear markets are perfect for releasing initial versions of products to gain feedback and refine them. If you have achieved product-market fit, communicate your product's value effectively and optimize marketing strategies.
4. Streamline your business model: Enhancing profitability is key during a bear market. This could mean introspecting overhead costs or planning towards profitable growth. You may consider launching premium offers or modify pricing strategies to enhance revenue. Moreover, it's worth exploring opportunities to diversify your income sources.
5. Review your market strategy: Ensure planned spending on marketing. Try to maximize organic and cost-effective marketing strategies. Understand who your target users are and their preferences. Establish robust relationships with thought-leaders and influencers in your industry to positively impact your user base.
In times of market distress, it's important to keep faith and stay committed to your vision. It's in the crucible of bear markets where the foundation for innovative applications and groundbreaking use-cases are laid.
This article is not financial, investment, or tax advice. Please seek professional assistance to navigate your specific situations.
Written by Abhishek, who leads infrastructure, DeFi and non-media investments for Polygon Ventures, a venture fund focusing on Web3 investments. This piece was published in collaboration with Cointelegraph Innovation Circle, a collection of senior tech executives pioneering the future of blockchain. The views are those of the author and do not necessarily represent those of Cointelegraph or the author's employer or any affiliated third party.
Published At
11/13/2023 1:00:00 PM
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