Once a gateway for aspiring entrepreneurs, even blockchain enthusiasts with successful startups are benefitting from a new wave of hackathons and incubator projects.
While experts in more traditional industries may shy away from such activities, the development highlights how, despite the progress it’s made so far, the blockchain sector is still in its infancy. Now, there are signs this realization may be causing a broader business model shift.
While bitcoin companies may have started out appealing to enthusiasts (hoping to gain enough momentum that they could then garner mainstream attention and adoption), Scott Robinson, founder and vice president of Plug and Play Fintech, thinks this strategy hasn’t worked.
Robinson, who has incubated a number of startups seeking to use the technology to disrupt incumbent industries, told CoinDesk:
“At the end of the day, typically the channel to capture the end consumer is to go through large financial players.”
Bitcoin and blockchain entrepreneurs have had trouble accessing executives at these institutions and so rely on hackathons – many times hosted by legacy players – to network with potential connections, he said.
For startups, hackathons can be helpful in connecting them to possible legacy institution clients.
Plug and Play’s accelerator provides that service, working with 96 early stage companies since its launch in February 2014, 46 of which had received external funding before entering.
But there’s also benefit for corporates too. Legacy institutions that work with incubators and host hackathons find themselves in a position to connect with new technology that could substantially enhance their business, he said.
And now so, more than ever, corporates of all kinds are taking advantage. For instance, Capital One held a hackathon in San Francisco with Chain in July 2015, for which the bank flew in 70 of their employees to work on blockchain-based solutions with blockchain experts.
Hackathons like this “reconcile those that are in the [financial services] domain but don’t have a great understanding of blockchain with those that understand blockchain but don’t have a good understanding of finance,” Robinson said.
There are a number of successful (by some measures) bitcoin and blockchain startups that continue to participate in hackathons or have joined accelerators. Blockchain services firm Bitfury Group, for example, raised $90m to provide bitcoin mining services, earning enough to even create its own accelerator, the Blockchain Trust Accelerator.
Yet, even it went into an accelerator backed by Ernst & Young in an effort to take its business forward. Bitfury won “Best Pitch” for its blockchain solution for digital rights management last week, and has since partnered with the ‘Big Four’ firm to take its solutions to enterprise firms.
“We are very proud of it, we did that competition, built a relationship with senior partners. We quickly understood there was a relationship where Ernst & Young could add value with the large multinational customers using Bitfury’s expertise around the blockchain,” Marc Taverner, the company’s head of business development, told CoinDesk.
Likewise, Darren Tseng, co-founder and vice president of product at Adjoint, a distributed ledger and smart contracts platform for financial services, launched his company in June but continues to participate in hackathons.
“For general hackathons, I do them for fun and networking,” Tseng said.
Not that either of those has to do directly with his work at Adjoint (it isn’t a consumer application,” he said), it’s just about making friends with other developers.
However, fresh ideas and new hires do sometimes arise from hackathons.
“Hackathons are one of the best breeding grounds for new ideas that I have ever come across,” said Jeremy Gardner, founder of the Blockchain Education Network and the entrepreneur in residence at Blockchain Capital, a venture fund in San Francisco.
“Forcing programmers to go from the drawing board to a working demo in 24 to 72 hours spawns a special, raw form of creativity that I have yet to see elsewhere,” he said.
Gardner has been responsible for helping organize and judge hackathons for several years. Recently, while attending the Distributed Health hackathon, he decided to join blockchain-based medical appointment integrity startup, Saavha, as a co-founder to lead business development.
And he thinks, even with a business, programmers and developers should continue participating in hackathons to be introduced to new concepts, products and potential collaborators.
“The ROI for participants is clear, but it can also be equally useful to companies that want to have programmers test their offerings for the first time or in new ways,” said Gardner.
Those who make an impression at hackathons can also open doors through awards.
Tseng also recently participated in the…