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As the crypto space has evolved incredibly quickly over the years, we’ve seen an emergence of new projects looking to bring new ideas and innovations to the forefront of society. However, the path to success can be a long and bumpy one, especially with so much competition and a plethora of new market entrants.
Luckily, many of these projects are given the opportunity to start from the ground up with the support of crypto incubators; these incubators are a more recent phenomenon in crypto terms.
What is a Crypto Incubator?
Simply put, crypto incubators are companies that search for potential successful projects and give them a helping hand throughout the critical stages of their development. This often occurs from the ground up. Services that an incubator provides can range from funding, marketing, advising, strategy, community building, and more.
These days, being selected by an incubator is a huge opportunity because projects receive guidance from experts in the space to truly propel their growth and raise awareness. With thousands of different projects having already flooded the space, the services that an incubator can provide can truly promote a project’s brand and differentiate it from the competition.
Crypto incubators are also often referred to as venture capital firms or accelerators in the digital asset space – they are often made up of top venture capital experts with years of experience who assist with guidance. In return for their services, the associated project will typically surrender a certain amount of equity, which in turn helps drive the incubator’s motivation to make it a successful venture.
Humble Beginnings: How it all started
Incubators really gained traction after the 2017 crypto bull run when new projects were popping up left and right and growing astronomically in market cap within a matter of weeks or months. The market craze ignited many of the incubators that we see today, as well as established a need for more of them in the marketplace.
Although dramatic growth was attained, 2017 was still a very early stage for crypto and incubator companies. Over the next few years (mainly beginning in 2018) incubators would really start to blossom and establish themselves in the space as true powerhouses to put promising projects on the road to success.
Different Types of Incubators
Now that we’ve discussed general details and how incubators came to be, let’s dive deeper into some examples that exist today:
DuckDAO: DuckDAO is a decentralized DeFi venture capital company that helps provide early startups with funding, strategic guidance, listing services, marketing, and more. Projects are funded by the community of duck contributors, getting expensive support from the get go and fueling organic growth. Their portfolio includes projects such as ampnet, Ramp DeFi, Shadows Network, and many more.
Binance Launchpad: Being the world’s largest crypto exchange, Binance has established name recognition and the largest liquidity volume, reeling in many projects and investors. Its launchpad program helps blockchain projects raise capital and generate buzz, as well as provide advisory services. At the time of this writing, it has raised over $70 million, launched over 39 projects, and attracted over 600,000 investors.
Catena Capital: This organization is a German blockchain venture builder and ICO accelerator. The benefits it can provide include seed funding, growth of resources, mentorship, and/or an office. Recent investments include Herdius and Crypyotanator1337, with more to come.
Coinbase Ventures: Coinbase is known as perhaps the most compliant and regulated US exchange – it has cemented itself as a top-notch and secure exchange all around. It provides financing to early stage companies with the most innovative ideas to advance the crypto space. Some of its investments include well-recognized names such as Compound, BlockFi, Etherscan, UMA, Dharma, and more.
Huobi Eco: Huobi is one of the biggest global crypto exchanges, and their Eco incubator division leverages a strong team of high-network individuals and an investment fund with over $200 million to bring opportunities to companies across the board.
Benefits of Incubators for Investors
Of course, crypto incubators strive from providing their services and great value to the projects they partner with. However, it is also important to highlight how crypto investors benefit from the emergence of quality incubators setting up shop. The ICO craze of 2017 was considered the first opportunity for investors to sink their teeth into pre-launch sales token sales for new and promising projects, but this has dramatically changed.
Now, with crypto incubators, investors can rest assured knowing that the projects they are investing in are properly managed by professionals, taking out a lot of the guesswork and uncertainty upfront. Moreover, incubators can often help eliminate the previously coined “pump and dump” nature of new token launches. Increased investor confidence will in turn help sustain organic growth.
Investors are one of the biggest factors in helping projects succeed, mainly through capital injection to spark growth, so incubators are a net positive in this regard as well.
The Future of Incubators
We’ve explored the history and some of the big players in the incubator world – so what’s next?
As the crypto space begins to become more transparent, and regulations from governments are beginning to kick into effect more than ever before, we are likely to see a rise in the number and quality of incubators.
At this stage, incubators have evolved to the point where they have essentially become integral to crypto. Although there is no guarantee a project will be successful by receiving their services, their chances are greatly increased, tremendously driving up their value. In addition, the amount of capital flowing into crypto from the traditional finance world is growing, only increasing opportunities for funding and growth to be funneled down from the top.
Overall, the future of crypto incubators looks bright. The more authenticity there is, the more widespread adoption will occur, resulting in a true transformation of the industry for the better.
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