Retail investor boom could accelerate blockchain startup growth

by | Oct 16, 2022 | Technology

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According to research by Vanda, retail investors have poured $400 billion into the stock market since 2020. This represents twice the number of equities they purchased in all recent years combined. Traditionally, retail investors who are financially vulnerable and risk-averse steered clear of risky asset classes and stuck to the 60/40 investment strategy. However, the scenario has now changed. 

Riding on the back of fintech and blockchain technology, retail investors are now marking their presence in new areas. Fintech apps made it easier for retail investors to access the stock market, introduced zero-commission trading, and provided pre-built tools that offered convenience like never before. In fact, the impact of fintech has been so strong that 72% of US-based investors are likely to switch banks if their bank does not support their preferred fintech application.  

Blockchain technology, meanwhile, democratized financial markets and lowered their entry barriers. Asset classes like securities, derivatives, equities, debt, and commodities, which were previously out of the retail investor realm, are now easily accessible over the blockchain, thanks to asset tokenization. Blockchain-based protocols have recently opened venture capital doors for retail investors. And their entry into the VC market is a revolution that has the potential to propel the startup ecosystem. 

Retail investors in the startup ecosystem: Where do they fit in?

Funding startups has always been the forte of venture capitalists. In fact, the VC market is considered the engine for innovative startups. But this space is occupied mainly by institutional investors; retail investors represent only 1% of it. This leads to a myriad of problems. Institutional investors’ dictatorship over the VC market puts startups in a chokehold. And according to TechCrunch, VC kills more startups than slow customer adoption, technical debt and co-founder infighting do — combined.

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