California-based accelerator 500 Startups has announced it will fund five bitcoin companies in its latest batch of startups with $100,000 each.
The bitcoin startups are part of 500's Batch 9 group – a total of 30 companies building business ideas over a period of four months at the accelerator.
Sean Percival, who runs the incubator for this batch, says the funding will allow the bitcoin startups to really focus on product:
"$100,000 for these companies is going to go a long way. For some of them it actually provides them a year of runway, so they don’t have to go raise money and they can really prove the product out."
Building bitcoin businesses
In addition to the $100,000 in funding, the bitcoin companies in the 500 Startups programme will receive mentoring from experts within the industry.
"I’m looking to bring in thought leaders in bitcoin that can help them, and to help them find the right investors," said Percival, "because there’s not many of them."
He believes that Silicon Valley only has a handful of investors interested in bitcoin because the total addressable market isn't very large yet:
"Consumer adoption is very low right now, and it’s not growing at the pace it probably needs to."
500 Startups is known for embracing marketing and distribution in order to build up its companies. Percival's background is in marketing, so his experiences will translate into helping to get the word out about these businesses in order to grow mainstream awareness.
Another reason why 500 Startups is so generous with its funding is because the accelerator understands the cost of hiring developer talent in Northern California.
Percival says that most startups need to go out and find software development expertise to help build a company:
"In most cases, they need to hire developers. And developers are costly. With that money, it’s not just one guy in a corner trying to make it work."
The Bitcoin Job Fair, being held next month at the Plug and Play Technology accelerator, is one source of that Percival sees as one avenue for finding talent in the area. "A few of them are going to attend that," he said.
There are currently three other Silicon Valley accelerator programmes that are incubating bitcoin companies in addition to 500 Startups.
Boost VC has had the largest number of bitcoin-based startups go through its programme and plans on funding 100 more in the next few years.
Plug and Play Technology Center in Sunnyvale is also accepting bitcoin startups. CrossCoin Ventures in downtown San Francisco is also looking to fill out its space with virtual currency companies.
Percival says the incubator ecosystem that exists today is collegial in nature; the accelerators all understand that it takes a group to help build an industry around cryptocurrencies:
"All the accelerators are sort of being very symbiotic. We’re all in this together right now, we have a lot of work to do."
The five bitcoin companies in 500 Startups' programme include:
- GoGoCoin – sells bitcoin in gift card form to provide an easy way for users to obtain their first BTC
- Bonifide.io – anonymous transaction ratings to help users build up a reputation score
- Coinalytics – bringing real-time data to users via information analytics and news aggregation
- Neuroware – HTML5 wallet, private keys are stored in a user's brain using distributed deterministic components
- Monetsu – focusing on merchant adoption and payment processing
Bitcoin is the core business for each of these companies. Altcoins aren't at the stage that a startup should really be focusing a company on, according to Percival:
"I’m mostly focused on bitcoin. I’m interested in some of the other things going on, the altcoins. But all of the companies are focused on bitcoin."
500 Startups image via betakit