An interesting topic was posted on Reddit detailing how venture capitalism is a grave threat to Bitcoin and Fintech startups. With the expected return on investment as soon as possible, companies will either have to grow spectacularly, or risk being acquired by others. This is not a very favorable scenario for any startup in the world of Bitcoin and blockchain.

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A VC Is Not Always Best For Business

Anyone who has ever started their company will gladly tell stories of how difficult it was to secure funding and get things moving along. For most entrepreneurs, that funding comes in the form of a bank loan, but things are vastly different in the world of

This is where investors and VCs come into the picture, as they are the ones with the big chequebooks who are looking to be part of the next big thing. However, raising a lot of funding from one – or a select few – investors is not always a positive thing, even though it may appear to be at first glance.

When a VC comes along who invests in a Bitcoin and FinTech startup, certain expectations come along with the funding. Companies have to ensure a speedy return on investment, and preferably a profit to boot within the first three years. As we are all well aware of, achieving those milestones is all but impossible in the world of Bitcoin and digital currency.

Let’s be honest for a minute, and acknowledge very few startups achieve spectacular proportions in the first few years. However, a VC will not be all that patient, as they put in a lot of money to see the company succeed. Failing to deliver on expectations will not only lead to no further investment by the VC but also a chance of being bought by a different company.

Not that there is anything wrong with that latter part, mind you, as most startups are created with the single goal in mind of being acquired at some point. As we have seen with the recent acquisition of ChangeTip by Airbnb, there could be a bright future ahead if this were to happen with one’s startup. But not all companies turn out so positive, mind you, as a VC can be very aggressive when it comes to getting the money back, and they may very well resort to striking a deal to have someone buy out a startup they invested in personally.

There is one limitation for Bitcoin startups most venture capitalists seem to forget about: the digital currency ecosystem is still very small. Granted, more funding should help grow the Bitcoin ecosystem over time, but things will not happen overnight, or within the next few years from now. Holding Bitcoin is a long-term investment, and raising funds for a startup in the digital currency space is a longer-term investment.

Source: Reddit

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