Part 6 in our ‘How To Make Money in Cryptocurrency’ series. We’ve covered speculation, freelance and formal employment, security token offerings for cryptocurrency startups, online education courses and even referrals. Today we’re going to take a look at advisory rolls in cryptocurrency startups, and how that can become a tidy bonus income.
It’s no secret that 2017 saw the rise, and fall, of thousands of ICOs. Not a day went by without a team publishing a 50-page whitepaper, pre-allocating 30% of their coin circulation to the ‘development team’ and issuing their smart contract on Ethereum. Here at Newconomy, we’re not encouraging unscrupulous or risky financial decisions. However, the world of ICOs, and STOs is set to significantly expand in the near future.
Conservative estimates put the entire cryptocurrency ecosystem between 2-5 trillion US dollars in 3-5 years. With such potential growth, the size of market-share for startups will also increase. Advising professional and exciting cryptocurrency projects, in return for future token vesting, could be a very smart move.
The Past vs the Future
Traditionally, advisors for startups will be offered an allocation of shares, divested over a number of years. This will encourage loyalty and hard work from the advisor, who will have a keen interest in the company succeeding. Vesting equity cliffs vary but tend to be over 4 years for a few percent.
As the world of finance comes to grip with the new age of digital assets, these share allocations are more likely to take the form of token distributions. As with shares, advisors will be contracted into a specified amount of tokens, and often limited to how much they can sell per month. Although a founder, figures like Jed McCaleb have been subjected to the media spotlight for the amount of cryptocurrency they were auctioning every month – gifted to them for creating a company.
Identifying the Next Big Thing
Sadly we don’t own a crystal ball, and therefore predicting what will be the next big thing, and most importantly who, is very hard indeed. What we can do, however, is narrow down our chances of landing that advisory position at a future-successful startup by following, and trying to predict industry trends. STOs (Security Token Offerings) are predicted to potentially create the next major wave of industry investment, dwarfing the 2017 Ethereum run. Signing up to services such as AngelList and Upwork and creating alerts for keyword job positions will keep you ahead of the game. Having an up-to-date LinkedIn profile, resume, as well as social media presence won’t hurt either.
Lambo or Yacht?
Before we start spending our untold millions earned from all the successful projects we’re going to advise on, it’s important to seek professional legal advice before signing any contracts. How much you are due, and when, is vital. Buy-back clauses, as well as penalties, are often included in corporate contracts. The stories of people unfairly left out of future company successes are longer than the tales of actual successes. So whilst it might be an initial expense, it is completely worth it in the long run.
Advise, Keep Tabs and Set a Date
Now it’s not up for me or any of us here to tell you how to be the best cryptocurrency advisor in the market. You’ll obviously already know how often to keep in contact, what to check on and what key dates to put in your diary. Needless to say, keeping track of the little details as well as all the startups you are involved in is vital, and not only for accounting purposes. Above all, as with most things in life, enjoy getting to know super-interesting and passionate people, and (try) to have fun!
So there you have it – part 6 in our ‘How To Make Money in Cryptocurrency’ series. Make sure to stay tuned to hear about all these topics and many more being covered during the New Economy Online Conference sponsored by Newconomy and (UBAI) the University of Blockchain and ICOs.