In the high-stakes world of venture-backed startups, not growing is the same as dying. Historically, stalled companies sought a sympathetic acquirer or quietly shut down. Now, startups have a new potential lifeline: They pivot to blockchain.
Kik kicked things off in September. The messaging app, which has struggled under competition from Facebook and Instagram, created its own cryptocurrency called Kin, which can be used to buy and sell things via the Kik app today, and other apps in the future. The company sold tokens for the project, raising nearly $100 million from institutional and individual investors. Since then, a flood of startups, including Skedaddle, an “Uber for buses” company, and Loomia, a wearables company, has followed suit.
Take Listia, a peer-to-peer marketplace for exchanging goods. The site experienced early success after launching in 2009, amassing 10 million registered users and raising $11 million from well-known venture firms General Catalyst and Andreessen Horowitz. But in the past year, the company cut its marketing budget in order to turn a profit, which meant its growth stalled. “We had a business that was working but wasn’t growing as fast as everyone wanted,” says co-founder Gee-Hwan Chuang.