Will blockchain ICOs replace traditional funding for start-ups?

Blockchain is automating and streamlining business processes – start-ups that don’t embrace it risk getting left behind

The UK’s tech sector has given birth to many leading businesses and inspired the establishment of so many others.

This remains so in the digital era, as the online world shifts us to a truly global economy. Now with Brexit looming, looking to new growth and digital innovation has become even more important as the UK is set to leave the EU.

All innovation by default demands change, and blockchain is a key pillar of digital transformation.

It offers a new way to build a more agile business, with a lean and dynamic structure offering an easy way to optimise processes, improve efficiencies, and raise capital. So how can a UK start-up make blockchain the centrepiece of its digital transformation?

Digital Transformation Defined

The definition of digital transformation is simple. It sees digital products and services applied to an existing business. A definition may be simple, but its implementation is where real success – and failure – resides. For start-ups, the margin of error between the two is always so small.

Blockchain technology is advanced and secure, innovative but elemental. A cutting edge digital ledger‚ able to incorporate existing business processes – and optimise them. This digital ledger technology can provide a network for fast‚ secure‚ and transparent transactions. Despite this‚ stats show the adoption of blockchain technology by UK businesses has been slow.

How can blockchain help UK start-ups?

The old saying ‘the customer is always right’ is a guiding star here. The customer is always right – and digital business must be responsive.

Realising blockchain technology’s applications for a UK business can take time. Finding ways it could automate and streamline existing processes can be difficult. The implementation of blockchain is often a challenge‚ but it’s potential to reduce errors and loss‚ and improve accuracy and consistency is clear.

While the digital elements of this are outstanding‚ digital transformation with blockchain also has very human benefits. As an automated‚ failsafe digital record‚ it can free professionals from repetitive administrative tasks that diminish creativity and productivity.

Why use ICO to raise capital?

Blockchain offers a good avenue for startups to raise capital. Once upon a time, this process was slow, laborious, and full of red tape. Today, by utilising an Initial Coin Offering (ICO) a business can raise money in a clear-cut and seamless way.

ICOs allow for a business to seek direct investment via the blockchain from interested parties without all the red tape that is usually involved in capital raising with a process like an Initial Public Offering (IPO).

A new start-up seeking to develop an innovative technology can raise capital via an ICO by releasing tokens. In time it’s envisioned anyone who holds a token will have access to the technology once it’s released. ICOs can be good but it’s important to note they do differ considerably from an IPO.

At their best ICOs grant someone with a token(s) early access to cutting edge technology‚ but they don’t grant ownership rights like an IPO does in shares. The same freedom that makes ICOs easy also can be dangerous as scammers see the chance to make a quick pound with an unproven concept.

Present regulations of ICOs are a big debate in the UK. Finding the balance between protecting consumers against ICOs that are unlikely to succeed and lose money must be balanced by the recognition innovative technology is often dismissed at first‚ and then goes on to be a great success.

British start-ups who seek to do an ICO will need to ensure their plan is clear-cut, realistic‚ and transparent. To win the confidence of their token buyers, and ensure their ICO enjoys ongoing success.

This doesn’t mean an ICO can’t also include optimism about the new tech‚ but tall trees always require strong roots to secure their growth.

Start-ups that don’t embrace digital transformation risk getting left behind

A British start-up undergoing digital transformation with blockchain can be really progressive. It could become essential. Recent stats have shown there are over 46,000 start-ups in the UK.

That number is brilliant but also represents really strong competition. UK start-ups in the future will either optimise their operations via digital transformation, or risk getting left behind. ICOs are at the heart of this equation, offering an opportunity if done right to gain a market advantage.

Conclusion

Digital transformation doesn’t need to occur overnight. Like any business move, it is about creating a plan for growth that will be built on strong foundations. This is an essential path whatever type of start-up you have‚ and whatever your ambitions for digital transformation are.

Blockchain isn’t a turn away from the past. It’s a new chapter in a story of compelling but solid business growth. The future of UK start-ups is interwoven with this journey. If done right‚ building blockchain by blockchain could deliver much benefit.