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last two years have been phenomenal for decentralized finance (DeFi). Starting at approximately $ 794 million in April 2020, the DeFi market grew 6.575% in one year, reaching US $ 55.43 billion. ongoing pandemic has greatly accelerated the growth of DeFi, as social distancing has intensified the need for digitization. During this time, legacy systems have increasingly faced the new normal and authorities have cracked down on them. risks of censorship, inflation, manipulation, etc. y are at their highest point.
In the midst of all this, DeFi has emerged as a savior, and with good reason. However, we cannot tell this success story without alluding to incubators and launch pads. Although they work behind the scenes, they are often the real turning points in terms of the success of DeFi projects. So now, the question is, what makes incubators so crucial? Isn’t it just about innovative ideas and their potential? Well yes and no.
need for financing
DeFi market is full of startups and startups, displaying brilliant revolutionary ideas. However, even because of their immense disruptive potential, these projects face crucial obstacles to their progress. First, it is the lack of funds, but also a competent mentoring.
Obtaining funds or cash is a challenge for most innovators, forcing them to approach multiple sources. But once they look for investors, they lose valuable time, effort, and resources in the process. Over time, they deviate from working on their nascent concepts and their later development.
In a pre-pandemic world, institutional investors were more willing to finance startups. However, given the turmoil caused by the pandemic, they are playing it safe and investing in a risk-free way that is detrimental in the long run. As a result, projects increasingly turn to crowdfunding to achieve their funding goals, but often fail. So much so that almost 89% of projects do not achieve their financing objectives.
In light of this, incubators and launch pads provide the necessary funding opportunities for DeFi projects. In addition to providing great liquidity, they can infuse budgets into budget projects through the right channels at the right time. Additionally, incubators have connections with experienced financial advisers and venture capitalists. As a result, money and expertise flow smoothly, allowing the project to flourish.
A symbiotic relationship
You might be wondering what’s in it for launch pads. Why are you funding DeFi projects in the first place? answer is simple: they see great returns on their investment in the near future. Launch pads are not philanthropic organizations helping new entrepreneurs. Instead, they build symbiotic relationships with startups, providing their platform and knowledge in exchange for a stake in the company.
Once the start-up is successful, the incubator continues to earn dividends from them. greater the success of a company, the greater the returns. That’s why launch pads follow rigorous due diligence procedures and make sure their “graduate students” are as serious as they are.
As of 2019, cryptocurrency exchanges have been involved in the incubation process. y collaborate with launch pads to present a DeFi startup token to a wider audience. agreement benefits everyone; DeFi project gets broad exposure, the exchange generates revenue, and the launch pad achieves long-term returns.
It’s not just about the money
To reiterate a crucial point, launch pads or incubators simply have no financial ties to DeFi projects. relationship involves networking, mentoring, counseling, and training. Launch pads often have experts on board to guide budding innovators in the right direction. Companies that receive support from Launchpad during their development stages tend to be more successful than those without support. Funds are needed, but it is expert assistance for better ideation that drives success the most.
Finally, we conclude with the words of Andrew Adcock, CEO of Crowd for Angels. In his view, “first, they provide (launch launchers) knowledge transfer… second, they provide a key network of investors, service providers and stakeholders… finally they provide a vital source of funding at an early stage… a company entering an incubator can be seen as a ‘league’ and thus create a good foundation for potential future. “With all his wisdom, Andrew recognizes the bright future that awaits DeFi, and so do we.
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