Blockchain has the potential to revolutionize financial services and other industries. But it will only succeed if everyone realizes its potential. To that end, entrepreneurs and investors are starting to explore the potential of decentralization-focused FinTech services, known as Decentralized Finance or DeFi.
DeFi typically refers to services that provide alternative, cheaper and more convenient ways to access and manage financial services. These services have the potential to disrupt the entire financial services industry. And it’s not just the financial services industry that’s interested in DeFi. Investors are also lining up to provide venture capital funding for startups offering alternative financial services.
We’ll explore what decentralization and DeFi are, why the industry is interested in them and the top DeFi-focused venture capital funding opportunities.
What is decentralization?
Decentralization is the process through which data and applications are decentralized from a centralized entity to distributed nodes.
Centralization occurs when power is concentrated in a single entity, rather than being distributed across a larger group of entities. Centralization allows for easier control and management of data and applications, but it also makes it easier for hackers to attack.
One of the most famous examples of centralization is the major disruption of the financial services industry that occurred in the 2008 global financial crisis. That crisis is often cited as proof that the current financial systems need to be decentralized. But the most notable and impactful DeFi service was never launched. Instead, it was a side project.
Why is the financial services industry interested in DeFi?
As mentioned, it all comes down to decentralization. Decentralization allows you to move away from centralized systems that rely on a single point of failure. For example, if one company or entity holds the majority of the data and applications, then a major disruption would have a large impact. That’s because a large disruption would require access to the single entity’s data or access to the single entity’s applications. Alternatively, a decentralized system does not have to rely on a single entity holding the data or applications.
Top DeFi-Focused Venture Capital Funding
These are the top venture capital funding opportunities for companies offering Decentralized Financial Technologies or DeFi.
- Blockchain Accelerator Incubator - A platform that provides mentorship and access to blockchain investors and future start-ups.
- Blockchain Direct - A blockchain advisory firm that provides advisory services, including investment and blockchain consulting.
- CoKedge - An investment management company that focuses on the tokenization of asset-backed securities.
- Digital Asset & Security Fund - A venture capital fund that focuses on investments in blockchain-based assets and security token offerings.
- Ethos - A cryptocurrency wallet and investment management platform that allows users to invest in digital assets.
- Gemini - A cryptocurrency exchange and custodian that provides one-click buying and selling of digital assets.
How to find and fund a Decentralized Financial Services company
There are many ways to find and fund a Decentralized Financial Services startup. The best way is to attend blockchain events and meetups, talk to people and attend presentations by blockchain companies. Get to know the founders of blockchain companies, who are often looking for partners in financial services.
Once you’ve found a blockchain company with a product you like, you can do a few things to stand out. First, make sure you have a great product. This should be easy to determine if you’ve managed to build something useful. Next, find an equity syndicate and get an investment group together. These can help to increase your chances of raising money from investors and make it easier for you to obtain funding.
Finding and funding a non-financial services Decentralized Financial Services startup
Once again, there are several ways to find and fund a non-financial services Decentralized Financial Services startup. The best way is to attend blockchain events and meetups, talk to people and attend presentations by blockchain companies. Once you’ve found a blockchain company with a product you like, you can do a few things to stand out. First, make sure you have a great product. This should be easy to determine if you’ve managed to build something useful. Next, find an equity syndicate and get an investment group together. These can help to increase your chances of raising money from investors and make it easier for you to obtain funding.
Final Words: Is the financial services industry ready for fintech?
The financial services industry is large, powerful and well-funded. In many ways, it’s seen as the last bastion of centralized control. Because of this, it will take a lot to disrupt it. However, over the past few years, we’ve seen a major shift in the way blockchain is perceived. Belief that blockchain will be a major disruptor to many industries is growing, and with it comes the belief that blockchain companies will disrupt the financial services industry.
In addition, financial services companies have been experimenting with blockchain technology for some time now. Several major financial services have been experimenting with blockchain for years. This includes banks such as Goldman Sachs and Credit Suisse and credit card networks such as Visa and American Express.
Given this, is the financial services industry ready for decentralized fintech? Yes and no. Decentralized fintech has the potential to disrupt the financial services industry. However, the industry is not as decentralized as it could be. HapPhi is heavily involved in DeFi
