How crypto technology is disrupting traditional startup models

From building a product to scaling fast, startups used to follow a fairly predictable playbook. But that blueprint is getting rewritten as technologies like crypto continue to change things. Surprisingly, a recent study revealed that over $100 billion has been raised for crypto startups alone since May 2014, showing a growing market interest in this space.

This shift is not just about launching tokens instead of issuing equity; it’s a reimagining of ownership, governance and community from the ground up. A big part of it comes from the growing adoption of stable, practical tools. Consider USDC, for instance. A fully backed and regulated stablecoin pegged to the US dollar, this token is making cross-border payments seamless.

As such, startups can pay international contributors in seconds, bypassing traditional delays and fees that reduce the effectiveness of operations. And beyond stablecoins, other crypto technologies like smart contracts and decentralized autonomous organizations (DAOs) are also providing new ways to build and scale companies.

Fundraising has gone borderless

If you’ve been in business for a long time, you will agree that raising money in the traditional startup world was often a slow, closed-door process. You’d need to pitch a deck and meet venture capitalists (VCs) only to receive support from a handful of gatekeepers – and that’s if you were convincing enough. The odds were against you if you didn’t have connections or weren’t based in a major tech hub.

Thanks to crypto, the script is quickly changing. Token sales are now making it possible for startups to raise capital from anyone, anywhere. There are no cap tables, equity dilution or accredited investor requirements. Just a whitepaper, a wallet address, and your pitch, and you’re good to go.

Companies like CloudTech are already taking advantage of this possibility. According to a recent Startup Daily report, this Melbourne financial service company raised about $14 million in Series A to help fund the rollout of an institutional-grade custody solution for digital assets.

As a result of such moves, Lucidity Insights noted a rebound in crypto funding during Q4 2024, with approximately $7.33 billion raised across 421 deals. That was like a 133% increase from Q4 2023. Now, a developer in Lagos or a designer in Sao Paulo can raise meaningful capital without ever stepping into a boardroom. This development brings a level of financial inclusion that has never been thought of.

DAOs are defining how companies operate

It shouldn’t be surprising that Bitcoin.com News recently valued DAO treasuries at $40.1 billion. Just before this valuation, the assets had, shockingly, increased by about $20 billion within just four months, showing how businesses are increasingly turning to these structures. A DAO is basically a digital organization where decision-making and management are distributed among its members, rather than being centralized in a single entity.

DAOs use blockchain technology, particularly smart contracts, to define rules and enforce them automatically to ensure transparency and trust. MakerDAO is a good example. Launched in 2014, this infrastructure governs DAI, a stablecoin pegged to the US dollar that maintains stability through a large amount of collateral. With its MKR governance token, MakerDAO allows holders to vote on proposals related to DAI, including adding new collateral types or modifying the stability fee.

In startups, DAOs are becoming a compelling alternative to limited liability companies (LLCs) or C-corporations. Founders can launch a DAO, issue governance tokens and allow contributors to vote on everything from roadmap priorities to budget allocations. This way, contributors can earn tokens instead of salaries while communities build together and share in the upside.

The Marshall Islands, interestingly, became one of the first countries to recognize these structures as legal entities. After passing the DAO Act of 2022, the country would later allow decentralized autonomous organizations to register as LLCs and operate legally within its borders.

Token incentives create built-in growth loops

As you may know, customer acquisition can be quite expensive. A study by OutboundEngine claims that you may need at least five times more to attract a new customer than to retain an existing one. This is why features like crypto-native projects that help get ahead of such costs are usually welcome.

When most startups issue their tokens, they create a micro-economy where early adopters can get rewarded for using or promoting the platform. The tokens act like equity, loyalty points and marketing spend all at once.

Think of it as an early user of a new decentralized music platform who earns tokens for uploading content and bringing friends on board. A year later, the token increases in value, say, 10 times. In this case, the user did not just help in building the community – they also shared in the platform’s success.

Don’t forget that most people generally trust word-of-mouth recommendations more than any other marketing method. And since incentives can turn users into brand ambassadors, startups can grow organically by rewarding their communities, without worrying about pumping billions of dollars into digital ads.

Considering all these developments, it may be illogical to think that crypto technology is not affecting traditional startup models. Its decentralization has particularly brought changes like borderless access, by allowing more people to participate in funding new projects.

Decentralized structures are also immutable, making it easy to verify transactions and actions, thus building trust. And by implementing attractive incentives in these structures, startups can convert users into brand ambassadors and improve customer loyalty, which may significantly reduce advertising costs.