Many a time, early stage blockchain startups often make the same mistakes as new businesses of all stripes: failure to devote attention and resources to basic legal and business issues upfront. Yet, blockchain businesses have an issue that tends not to befall businesses breaking into sectors that are not quite as nascent, which is the lack of an established playbook.

For a long time, blockchain firms often find themselves feeling in the dark, looking for guidance on how to navigate often spotty, if not non-existent, securities law governing virtual currencies, lest they run afoul of regulatory authorities. No thanks to intense scrutiny of initial coin offerings (ICOs) by the SEC in the ICOs era.

To pull enthusiasm together for an idea is the easy part. It’s another matter altogether to have the discipline and patience to implement a sound business and legal strategy around an idea. A lot of early-stage startups attempt to raise money for projects but when pressed for details regarding their formation, banking relationships, due diligence, etc, they present blank stares. It’s a bit like trying to pour the foundation of a house before the floor has been constructed.

Some business formation checklists that early-stage blockchain companies can use as a guide:

1. Blockchain use case.

Before forming any business built on blockchain technology, the blockchain use case should be front and centre. Questions to consider first and foremost are:

• Is blockchain necessary for the successful launch/implementation of the platform?

If so, why?

Many projects have very attenuated blockchain use cases and seem to be shoehorning blockchain into what would ordinarily be a garden-variety tech project.

• Does blockchain technology offer the best solution to the problem?

If the answer to that question is in the affirmative, will it be built using an existing blockchain platform or will a new one be built?

2. Corporate structuring

• What legal form will your entity take?
• Where will its legal home be?

Once these two questions are answered, the necessary steps must be taken to ensure that entity formation is completed, and the appropriate forms are filed in the jurisdiction where the entity will be formed.

3. Assemble a team of experts in the following areas:

• Tax structuring and compliance: choosing the optimal tax structure and ensuring compliance with relevant laws.
• Accounting and bookkeeping: generating financial statements, coordinating filings.
• Banking: establishing banking relationships and accounts in desired jurisdictions
• Human resources: selecting and setting up payroll, benefits.
•  Legal services coordination: You will need a qualified, experienced legal team to guide you through the regulatory environments in different jurisdictions and perform necessary due diligence. Is there intellectual property to protect? What other legal issues are at play? Also, you will need assistance with everyday legal matters, such as the drafting of a privacy policy, terms of use, and advisor agreements.
• Graphic design: logos, website, infographics, advertisements, promotional materials.
• Broker-dealer coordination: assisting in establishing relationships with broker-dealers, as appropriate.
• Marketing: generating awareness, attention and excitement about a project’s story and mission.
• Content management: coordinating the production and delivery of bespoke articles, posts and other content relating to a project and its team.
• Paid advertising: targeted campaigns on major advertising platforms
  Community building and management through general social media channels such as LinkedIn, Reddit, and Twitter; as well as industry-specific channels such as Discord, Steemit, and Telegram.
• 4. White paper and revenue model:

In the span of one or two pages, your white paper should describe your product, articulate the problem it seeks to solve within a particular industry, describe how you are going to solve the problem, detail other products in the marketplace and how yours is different, and provide a high-level overview of your business model, tokenomics and token usage specifics and outline your team members and advisors. A white paper should not be overly technical and should not focus on blockchain, per se. Blockchain is merely a component of the project and should not be the focal point of your white paper.

5. Fundraising timeline and roadmap:

• How are you going to deploy the capital you raise?
• When will you be seeking additional capital?

Every business should have a detailed roadmap to win investors’ confidence. It should contain realistic and achievable milestones and goals.

6. Prototype/MVP:

Another area that early-stage blockchain companies often fall short is the lack of a minimum viable product (MVP).  Many are armed simply with an idea. In today’s fundraising environment, an idea, without any proof of concept or validation, is not enough. Even a proof of concept, which validates the technical side of the project but is largely silent regarding the business case or user base, falls short in the eyes of many investors. An MVP provides validation in that:

• It has enough value that people are willing to use it or buy it from the outset.
• It demonstrates enough future benefit to retain early adopters.
• It provides a feedback loop to guide future development.

Conclusion:

Given the lack of a roadmap, blockchain companies are often left to forge their own paths, while still needing to heed regulatory guidelines, as murky as they may be. As the industry continues to mature, the wheat will be separated from the chaff. The firms that establish themselves as legitimate players in blockchain will be the ones that prevail — and will draft the definitive industry playbook.