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Cryptocurrency Funding Attracts Female-led Startup

With no legacy issues surrounding cryptocurrency capital raising, women are aiming for more equitable access to capital for startups.

Female startup founders have a notoriously harder time securing funding than men. But new methods of financing could help close the gender gap. One of those methods lies in the buzzy technologies of blockchain and cryptocurrencies.

“Cryptocurrency, being a digital platform, fundamentally erases that sort of bias and does create a sort of leveling of the playing field,” said Lisa Wang, founder and CEO of SheWorx. “Women who are savvy and are able to hop onto the train are able to raise money really quickly for their ideas.”

SheWorx hosted an event last month for its New York City members dubbed “Cryptocurrency 101: Practical Advice on Getting Involved in Bitcoin & Beyond.” About 35 women showed up to learn more.

“For a lot of women, they’re looking at the Bitcoin prices, the Ethereum prices, Litecoin prices and they’re saying, ‘Oh my gosh, it’s too late for me to get involved,’” Wang said. “It’s not too late, you didn’t miss the boat.”

Women received just 11 percent of total venture funding in the first half of 2017, according to TechCrunch.

What is blockchain?

Could blockchain pave the way to more financing for women?

Blockchain technologies have garnered a lot of attention lately, thanks in part to the roller-coaster ride of their most famous protocol and cryptocurrency, Bitcoin.

The distributed ledger technology (DLT) that underpins cryptocurrencies like Bitcoin enables peer-to-peer or machine-to-machine transactions without the need for intermediary third parties.

This removal of middlemen (and their subsequent fees) is a major draw for both startups and established companies across a variety of industries.

Wang said entrepreneurs should assess their risk profile, determine whether blockchain is a fit for their startup, and research the types of fundraising processes that could best serve them.

Unique coins

Tech startups are now exploring the option of issuing their own unique tokens or coins, based on an established blockchain protocol like Bitcoin or Ethereum. Others are creating entirely new blockchain protocols and alternative coins.

These initial coin offerings (ICOs) allow startups to raise money quickly in a limited amount of time, via crowdfunding. Unlike traditional initial public offerings (IPOs), ICOs do not offer investors an ownership stake in the company. Instead, investors assess the potential usefulness and value of an alternative or “alt” coin, and the long-term profitability of its parent product or service, whether it makes sense as a blockchain application.

Michelle McCormack is the founder and CEO of Casting Coin, an Ethereum-based token that will launch this year and be used as currency on a crowdsourcing platform connecting models and brands.

Using blockchain tech

McCormack spoke at the SheWorx event and explained how her fashion industry experience helped her identify a gap in the model booking business.

“Models are a perfect example of people that have a really hard time connecting with work unless they know somebody ... a lot of times, they’re faced with dealing with shady, internet intermediaries who are calling themselves agents,” McCormack said. “When they do get work, they have to give at least 20 percent of their rate to the agent.”

McCormack is a building a blockchain-based platform where industry influencers pay Casting Coins to up-vote or down-vote models, resulting in a new kind of crowdsourcing business model for the traditional model and talent agency.

“Over time, a natural influencer vertical and talent vertical will come up ... so that the brand can easily identify them, directly hire them,” McCormack said.

While some may be deterred by the ambiguous qualities of a nascent technology like blockchain, McCormack said women should get involved sooner rather than later.

“There’s no legacy of male domination in blockchain, because there’s no legacy. So why not get involved, build something?” McCormack said.

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What Is Blockchain?

Beneath the hype and controversy of Bitcoin, there exists a new tehcnology that will soon impact most people on earth - much like the internet has done in recent decades.

The core ideas behind blockchain technology emerged in 1991 when a signed chain of information was used as an electronic ledger for digitally signing documents in a way that could easily show none of the signed documents in the collection had been changed.

It was first applied to digital cash in 2008 in the initial paper describing the Bitcoin electronic cash solution, Bitcoin: A Peer to Peer Electronic Cash System, which was published pseudonymously by Satoshi Nakamoto. The actual author(s) and owner of the first Bitcoins remain a mystery. Since then, blockchain technology has become tightly linked to Bitcoin and is often assumed to be used for monetary transactions (although it is not restricted to simple fund transfers).

Nakamoto’s paper contained the blueprint that most modern digital cash schemes follow, with many variations . Bitcoin is in fact the first of many applications or use cases for a blockchain. Many electronic cash schemes existed prior to Bitcoin, but none of them achieved widespread  use. By adopting blockchain technology, Bitcoin achieved compelling capabilities that promoted  its use. Bitcoin's use of a blockchain enabled it to be implemented in a distributed fashion so that no single user controlled the currency and no single point of failure existed. Its primary benefit was to enable direct electronic financial transactions between users without the need for a third party.

It also enabled the issuance of new currency in a fair fashion to those users (sometimes called miners) maintaining the blockchain that, among other factors, enabled lower transaction costs for using the system. Payment of the mining nodes allows distributed administration of the system without the need to organize those maintaining the system. By using a distributed blockchain and consensus-based maintenance, a self-policing mechanism emerged that ensures that only valid transactions are added to the blockchain. 

Also, the blockchain enabled users to be pseudonymous, meaning that users are anonymous but their accounts are not – all transactions are publicly observable. Blockchain's open architecture has effectively enabled Bitcoin to offer pseudo-anonymity because accounts can be created without any identification or authorization process. Finally, the distributed maintenance of the blockchain created a system with complete transparency, which promoted trust in its use.

Since all transactions are transparent within the system, and must be verified before being included, blockchain technology greatly reduces the ability for users to double spend their digital assets. Thus, one of the most valuable aspects of applications built on blockchains is that they can enable business to be conducted with untrusted and unknown users.

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The Value of Authentic Content

Several years ago, I started a blog to get some of my ideas out in the wild and also to engage with people who might share an affinity for my sometimes unusual way of thinking. It was a rewarding experience that taught me a few important lessons about the difference between the quantity and quality of content.

In addition to the highly visible satisfaction of having my ideas published by a Forbes editor in several high-traffic articles (and in his new book), my favorite blog post was an investment idea about a little-known company in a backwater part of the biotechnology sector.

In a previous career, I researched individual stocks and managed portfolios that concentrated positions in a handful of risky but potentially rewarding companies. I developed a keen sense of conviction and an ability to quickly summarize the key investment thesis that was likely to play out for a particular company.   I loved this work and never lost my passion for finding the gems hidden among all the junk.  

When I came across Intrexon, a leader in the fledgling synthetic biology sector, it reawakened the thrill that comes along with uncovering a potential diamond in the rough.  I invested in 2013 and decided to write about my analysis for this promising company shortly thereafter.  My idea (characteristically) was a long shot because the company was small and undiscovered.  But I had a big idea about its potential value - and, I learned, that big idea also had unique value in Internet search because of its authenticity.  Literally, no one on the Internet thought the way I did about Intrexon at that time.  I decided to write one post summarizing my ideas about the company instead of writing a number of posts.

Today, I have been rewarded with fantastic investment returns (so far unrealized) and also a huge win in terms of my SEO and visibility goals in Google search. As you can see from the Google search engine results page (SERP) below, my blog post ranks number one for the term "intrexon investment" on page one out of 51,800 matches for that search term. 

Intrexon's stock has literally exploded since the time I published my blog post, and the company has received a lot of media coverage along the way.  Despite all the attention - especially from investment bank research departments as analysts discovered the company - my blog post has maintained superior SERP results. After my #1 rank, the next four ranking pages refer to Intrexon's own website (Google's search engine ranks pages by relevance, not websites).  Priceless!

What I learned in this experiment is that creating high quality, relevant content can be invaluable to gaining visibility.   And, perhaps equally as important, the more authentic the content, the better.

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Want to buy a dollar for fifty cents? Earn it....

When the Nightly News with Brian Williams publishes an infographic summarizing our declining attention spans at work and at home, it’s definitely time to think about marketing and customer acquisition costs. Brian’s data comes from the work of Joe McCormack’s The Brief Lab – an organization dedicated to lean communication. “Brief is better,” is Joe’s philosophy about communication.  Interesting.

I’ve encountered many business plans describing PPC customer acquisition plans illustrated in orderly, multi-year graphs. The supporting analysis typically points to favorable CAC and LTV trends that assume organic acquisition will occur through viral adoption once the purchased customers spread the word.  Purchasing customers is often the seductive remedy for overcoming the problem of abundant choice and scarce attention.  

This type of planning seems pre-processed to be sympathetic to business executives and investors who respond to analysis purportedly grounded in math. The future is uncertain of course, but spending to acquire customers contains the potential rot of being factually correct yet inaccurate. The future cannot always be determined using fact-based analysis – data is best used to address risk. For example, companies that rely on large customer aquisition budgets must operate at a higher margin - thereby creating ideal conditions for an opportunistic cost cutting competitor.  

There is an inherent contradiction in the words “purchased customer” - how neatly the words fit the complicated scheme. The contradiction surfaces when the excitement over rapid customer growth fades and the purchased customer underperforms relative to her organic counterpart - and in almost every case – LTV tumbles. (And this assumes you’re set up to track attribution and paid vs. organic search synergy.)

The data show that organic customers convert at a higher rate, have lower churn and stick around longer than purchased. After all, an organic customer arrived at your door to satisfy a want or desire;  the purchased customer arrived using a calculator. The distinction is that organic customers will have a story to tell her friends/colleagues and a bias in favor of her current choice – all of which leads naturally to organic growth.

Squeezed between narrowing attention spans and risky purchased customers, the options for long-term growth narrow quickly. The high quality challenge is to invest in earning customers through organic means as a strategy. While earning customers is not free, learning how to attract customers organically taps an almost unlimited resource while reducing risk. After, learning how to attract them means you understand their problem.  Joe McCormack would summarize by saying, "It’s optimal!"

 

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