There’s no doubt this crypto winter we’re experiencing has taken itse toll on a number of crypto startups. Some are going broke, some are experiencing pay cuts and layoffs, and some were prepared and are unaffected.
To gauge the overall effects this crypto winter has had, Coindesk surveyed 66 crypto startups to see how they were doing and what effect this grueling bear market has had on them.
According to the survey, 45 startups responded to the inquiry, 40 of them having a positive prognosis for the coming year. However, nearly every respondent admitted to feeling the brunt of this bear market to some extent, and they remain cautious about further fundraising and hiring.
However, Brayton Williams, co-founder of Boost VC, claims what we’re calling “winter” is merely a return to the status quo pre-boom:
“The investment money is returning back to the norm of difficult to obtain. I think the ‘winter’ is greatly exaggerated. We are just back to normal behaviors.”
Crypto Companies Who Prepared for “Crypto Winter”
The crypto startups and companies who remain vastly unaffected this crypto winter took necessary measures to prepare for a prolonged bear market. For instance, these crypto companies earned substantial amounts of funding during their ICOs and managed it correctly by diversifying their assets and selling crypto for fiat.
For example, Ricky Li, founder of Altonomy, a crypto trading, advisory, and asset management firm, advised his ICO clients to liquidate enough Ethereum (ETH) to sustain themselves for at least 2 years. The companies who listened are doing just fine right now — the ones who didn’t are not.
Li also advised his clients to move a large portion of their raised ETH into crypto indices to further diversify and mitigate risk. Some of these companies also bought options and diversified into other investments.
At the time, investors may have shunned companies for allocating raised capital in such a way, proclaiming that it should be spent on marketing, developments, etc. However, the companies who took action to protect and even grow their assets are in a much better position in today’s bear market.
Polymath (POLY), a crypto startup and security token firm, is one example of a cryptocurrency project who prepared with a good treasury-management plan and has flourished during this crypto winter.
Trevor Koverko, CEO of Polymath, said:
“Our technical roadmap has been accelerated. We view the bear market as a blessing for quiet, heads-down, development-focused projects.”
Another positive take on the crypto winter comes from Josh Fraser, co-founder of Origin protocol, who believes the bear market has made it easier to bargain with quality blockchain developers and find talent.
Fraser was quoted saying:
“We view this as a great time to pick up talent and build great technology, much like Google and Amazon got their head start during a bear market.”
Not Everyone Was Prepared for “Crypto Winter”
While there are companies who prepared financially for the prolonged market downturn and are now heavily focused, using this time to build out their projects and establish promising connections, many other crypto companies and organizations are experiencing quite the opposite.
One such organization who is really feeling the cold as of late is the NEM Foundation, a community-funded nonprofit established to promote the peer-to-peer cryptocurrency and blockchain platform, NEM (XEM).
Per a report from Coindesk, the foundation is planning layoffs across their 150-person staff due to severe budget cuts as a result of the prolonged crypto winter. According to the president of the NEM Foundation, Alex Tinsman, the foundation now intends to submit a 160 million-token ($7.5 million) fund request to the NEM community.
Tinsman, the newly elected president of the NEM Foundation said if the money is raised, it will be used to rescue the organization. He stated in an interview:
“Basically we realized we had a month to operate, due to the mismanagement of the previous governance council.”
Adding to this, Tinsman said the foundation spent roughly 80 million XEM between December 2017 and January 2019. Moreover, Tinsman proclaimed that the number of layoffs and pay cuts will be determined once they know how much funding they receive after the funding request completes in February.
As for the plan moving into 2019 and beyond, Tinsman plans to monetize the foundation’s activities, including enterprise training and affiliate marketing. She believes this restructuring is ultimately a positive step for NEM Foundation, and added:
“It’s really exciting to me that NEM has a strong suite of tools and a community that is moving forward to change the future. And now we can support them in meaningful ways.”
Do you think the NEM community will agree to raise $7.5 million for the previously mismanaged project? In your eyes, which crypto companies are flourishing and which are struggling during this crypto winter? Let us know what you think in the comment section below.