Trust is the water that allows any entrepreneur-investor partnership to grow. But how can you build your own in an ever-growing frenzy of crypto startups, thousands of which go belly up and lose billions in investor capital?

What Causes a Lack of Trust?

Any entrepreneur who has gone through the fundraising process understands that building a strong relationship with their investor is vital. Trust fuels future collaboration. Nevertheless, if you look at today’s founder-investor paradigm, trust remains in scarce supply. This is because the current system in which investors and entrepreneurs coexist is designed to erode trust rather than support it.

Entrepreneurs often set impossible expectations in their pitches to investors, such as promising fantastic revenue numbers. Of course, as the first quarter starts rolling, these promises inevitably fall flat. Underpinning their excuses, founders talk positively about developments that have no direct impact on the bottom line. Trust erodes in this way, hindering collaboration and the possibility for the partnership to achieve more.

Quarter after quarter, this vicious cycle goes on for years. In the end, you are left with a relationship riddled with mistrust and misrepresentation. Eventually, startups lose access to their most efficient source of capital, and investors dismiss the founders as failures.

Blockchain As a Confidence Machine

Many believe that the main innovation behind blockchain is security. That is why trust has steadily increased in the crypto market and has motivated investors to put their money into crypto-related projects despite colossal volatility and the huge number of scams. Cryptocurrencies are labeled as advanced digital currencies supported by cryptography to protect and manage transactions as well as the supply of digital coins in circulation. Indeed, cryptocurrencies provide trust through technology. And their booming popularity indicates that millions of supporters are ready to trust in blockchain and continue to use or invest in crypto projects.  

We’re used to perceiving blockchain as a technology for safe transactions and intermediary-free systems. But blockchain can not only serve as a secure way for 

transferring money. Blockchain users around the world are willing to organize their projects and money in a secure way while collaborating with those that share their values. That is all now possible due to DAO.

DAO: Exchanging Values in a Trusted Environment

Wikipedia defines DAO (Decentralized Autonomous Organization) as "an organization represented by rules encoded as a transparent computer program, controlled by the organization members, and not influenced by a central government.” No managers are needed: the rules laid down in the code remove any bureaucratic or hierarchical obstacles.

DAO’s main advantage is the smart contract. It was designed to avoid human errors or manipulation of investors’ funds. Every post-launch DAO action must be community approved, fully transparent and verifiable. Without bureaucracy and hierarchy, startups can grow faster by moving forward according to their stakeholder-monitored roadmaps.

One of the significant benefits of DAO is that there is no need for trust between the two parties. It’s easier to trust technology built with publicly available code that can be tested and fixed before launch.

How milestoneBased Guards Investors’ Interests

Inexperienced founders, inefficient roadmap management, and scams are the most common reasons for most startups to go belly up. We’ve created a multifaceted platform that makes an escrow smart contract the treasurer to protect investors from losing their funds. milestoneBased is built around a DAO-centric approach. Due to the very nature of blockchain, changes made to a specific project via voting protocols cannot be made individually to either a milestone or a roadmap.

To protect investors from completely losing their funds, we provide the possibility of systematic investing. This means that funds are transferred to the project in portions, and depending upon how well the startup is executing its roadmap and fulfilling the promised milestones, investors can either choose to continue putting money into the project or stop tranche funding. With the complete transparency that milestoneBased provides in project execution and progress against KPI’s, investors can identify underperforming milestones or malicious behavior early on.

Being a multi-sided platform, milestoneBased provides more granular visibility into investments and opens more opportunities for co-investment and direct investment thanks to its deep data analysis capabilities. 

Roadmap Execution Transparency

Transparency in a startup’s performance helps seed credibility in investors’ minds by demonstrating legitimacy and trustworthiness. milestoneBased roadmap design tool ensures that all are informed on the most important events of the project. Investors can withhold funds until they’re perfectly confident that the project’s progress matches its claimed goals. This provides more control over funds and pushes startups to execute milestones faster. 

Takeaway Message

Improving the process of funding for both parties, ensuring superior stakeholder collaboration, funds protection, decision-making data, governance, and transparency of deployed funds, milestoneBased increases any startup's chances of success and a greater return for its investors.