Three Things Crypto/Blockchain Start-Ups Need to Know About PR
Given the recent volatility of prices and a deluge of companies seeking to leverage the underlying “blockchain” technology of cryptocurrencies, the SEC, FINRA, and regulators the world over are either increasing oversight of cryptocurrencies, restricting their use, or banning them outright.
It’s natural for sophisticated investors and entrepreneurs to be curious about potential investments in cryptocurrencies, initial coin offerings (ICOs), or blockchain-related firms. Accordingly, it’s no surprise that existing asset managers and new startups are looking to implement crypto-based strategies and attract additional capital based on the prospect of higher returns. However, with the word “bubble” now ubiquitous in media coverage of the space, and regulators circling overhead, it’s worth taking a step back and considering the PR implications of entering a fast-evolving industry.
Know Your Terms – And Differentiators
Distinctions matter, and classifying a “blockchain” technology as a cryptocurrency isn’t just factually incorrect, but over-simplifies the breadth of companies entering the space. Indeed, a recent string of examples has stoked skepticism of the entire space. Companies, particularly small-cap public stocks, have amended their names or business plans to include the word “blockchain”, presumably to capitalize on outsize investor interest in the technology.
Reporters see through the strategy, and have sharply criticized companies looking to ride an opportunistic wave. So the question to ask any company entering the space is: why? What makes you unique? Have you developed a revolutionary use-case for blockchain? Are you offering an ICO based on more than an underdeveloped whitepaper? If you aren’t able to tell the story of why your firm or fund would survive post-“bubble”, you risk inviting more skepticism and ridicule than commendation.
Know Your Media Strategy and Narrative
Newcomers to the space need to clearly define their “media proposition.” In particular, professional investors or fund managers who have decided to pursue opportunities related to ICOs and cryptocurrencies should be realistic about how to approach media relations.
CNBC reported in October that well over 100 hedge funds had launched with a focus on the space—and that excludes other classes of investors, not to mention funds that launched in the fourth quarter. Our experience shows that savvy business people value media relations as a component to entering the space. In other words: you’ve got competition.
Convincing the media that you’re worthy of special attention requires a deliberate, well-executed communications plan. What is your background, and how have you established credibility? How does your investment plan stand out, and how will you communicate with different stakeholders and investors? Without answering these tough questions up-front, media relations may stumble, or worse, result in negative coverage!
Know Your Risks
Nobody has a crystal ball, but the groundswell of concern from regulators suggests 2018 could be a banner year or nadir for cryptocurrencies. For those hoping to launch a new currency, or a fund invested in the space, it’s essential to be well prepared to address any market corrections, regulatory actions, cybersecurity incidents, or allegations of wrongdoing.
A crisis plan should be drawn up in advance of a crisis, not as it unfolds; that principle applies as much to the current cryptocurrency boom as it does to any other industry sector or strategy. What’s different, now, is that the wild gyrations in prices for assets such as Bitcoin, coupled with near-daily pronouncements from national regulators, mean that even a market-moving event unrelated to your business could still have an major negative impact.
Say some highly visible cryptocurrency falls by 20%, 30%, or 50% next week. Is your business prepared to withstand related outflows from investors in the space? Are you prepared to explain why your fundamentals are sound? How will you continue to profit? Public relations helps answer those questions – as well as the ones you haven’t even considered yet