Identifying Diamonds in the Rough as Blockchain Enters the Trough of Disillusionment

Gartner Hype Cycle

According to Gartner research, 2017 is the year that Blockchain tech entered the so called Trough of Disillusionment. This is the time that comes after irrational exuberance has faded and technologies enter a long night during which the winners are separated from the losers.

Right now we’re still somewhere in the uncanny valley between the bubble and the moment it pops.  There’s hundreds of new ICO’s every month. Some have a viable raison d’être but there is a huge need to separate the wheat from the chaff.

Compared in both number and scale with traditional VC funded projects the Blockchain area has a long way to go. According to Venture Scanner Blockchain related acquisitions this year aren’t off to a great start. In total there aren’t a lot of firms making exits. In 2016 there were just 16 such events.

Blockchain Exits 2017
Photo Credit: venturescanner.com

Compare this to the number of exits and deals backed by VC firms and the immaturity of the market comes into focus.  According to tech.eu, among just EU Tech startups there were 783 VC exit deals in Q2 2017.

This underlines the Crowdstart Capital position. We don’t believe in huge exits with many competing industry buyers fighting for the next unicorn. We aim to be the adults in the room, the ones who know what industry actually needs and can push that dealflow number up by catering to those needs specifically. In order to do this we leverage both our experience building blockchain-based applications for a wide range of industry players and the industry specific knowledge gained from those collaborations.

We’re focused on the fundamentals as opposed to the hype.  We identify a need in a big market, learn how to serve it as well as customising the solution and finally sell that product to major industry partners to reshape existing processes. That’s how to make money in the Trough of Disillusionment. As hot as the ICO model of financing ventures is, the industry needs to have a clear eyed look at what real problems we’re solving and how sustainable our efforts will be over the next five years.