Factors you should consider for crypto startup valuation

When it comes to the valuation of your crypto startup, there are many things to consider. Is it undervalued? Is it overvalued? Where will your business be in the next five years? Which aspects of your startup should you focus on to increase its value? To answer these questions, look at what your business does differently from other companies, who your competitors are and how much you stand out from them, how large your market potential is, and how much of a demand there is for your product or service. The more unique or innovative your business idea, the higher it’s likely to be valued.

Get Ahead of the Curve: How to Value Your Crypto Startup

Hype Doesn’t Equal Market Share

For example, if you have a hot new coin that’s hyped up by a small but very loud community, that’s probably not going to translate into massive market share. And while low market share isn’t necessarily an indicator that your startup won’t succeed in its niche, it is definitely a risk factor.?

If you find yourself with a hot new coin with zero market share, keep in mind that it could take years (if ever) for your coin to become widespread enough to make you money. The bottom line is that hype doesn’t always equal l in any crypto startup—even if it has 100% hype and 0% market share.

No One Knows What the Market Will Be

There’s no way to predict how cryptocurrency will behave, and even though we can all make assumptions based on what happened in 2017, it’s important not to take that for granted. For example, you might assume a market crash would hurt your valuation—but that hasn’t been true since Bitcoin dropped more than 80% in 2013. In today’s market, investors aren’t afraid of volatility; they actively seek it out. That means things might be tough at first, but if you continue trying to grow your platform and add real value, expect positive movement over time.

Understand Potential Customer Behavior

Customer behavior is incredibly important in any industry, but especially so in cryptocurrency. Bitcoin is a strange phenomenon, and while it might seem obvious that people will be interested in cryptocurrencies, it’s not yet clear how they’ll use them. Some research has been done on cryptocurrency and blockchain platforms. Still, there are many more factors to consider when determining how large your market could be—such as whether there’s an incentive for people to use your platform versus another one, which factors will drive people to want a decentralized solution over a centralized one (or vice versa), and so on.?

The Size of The Market Matters

No matter how cool your technology is, if there isn’t a market for it, then it probably won’t sell. This means you should analyze and understand not only your own industry but also other industries that could be interested in similar solutions. You don’t want to develop an iPhone app that people love only to find out that no one really cares about using their phones on planes.?

But also keep in mind what goes into projecting industry size and trends. If a trade association says there will be x-million people taking flights next year, while individual surveys show half those people don’t have smartphones or internet access at home, you might need to readjust your vision of reality before moving forward with plans for an airport-based app development startup.

Competition Counts More Than You Think

It may be difficult to assess your company’s potential if there’s nothing similar on the market. While you can’t directly measure it, you can get a sense of how many people are trying to do what you want to do and whether or not they're doing it well. Take an inventory of direct competitors. Determine their strengths and weaknesses.?

Dig into their financial information and track how they've grown over time. Keep an eye out for new players in your field; if they haven't done any research, now is a good time! You might find that one company is taking all or most of your business - see if you can disrupt them or offer a product or service that will really improve your customers' lives.

Experience Counts But Is It Enough?

When evaluating a crypto startup for investment, there are three main factors that come into play: your team, your market, and your product. The first factor is always an experience. You need an experienced team, or you run a high risk of failure. Building from scratch is highly risky, and rarely does it end well. It’s important to consider how much money you want to raise at a valuation based on realistic projections. The best thing about experience is that you can put it on paper in terms of past performance and successful milestones achieved.

Fewer Users Is Fine If It Means Profitability

When you’re starting a business, your first step is always going to be finding potential customers. Yet, it’s easy for new entrepreneurs to get caught up in how many users they can attract and forget about profit margins. If your business isn’t profitable, you won’t be able to scale and grow even if people love what you do. In crypto, there are numerous startups that raised millions in ICOs but aren’t viable because they aren’t bringing in any profits with their current user base.?

Rather than focusing on a just number of users, think hard about profitability—then find a way to focus on growth later on once those two factors have been solidified.

How Crypto is trending? - Tweets:-

Hope the above-mentioned factors will give an insight into how you should take your crypto startup ahead and what factors should be considered for a successful ride in the market. For any further talks about the same, reach out to us. We’re in your corner to assist!