For those wanting to launch a Web3 startup, founders are likely finding themselves in unfamiliar territory. Especially if your experience until now is grounded in Web2 technologies, processes, and ways of working.
It can be daunting to implement solutions with blockchain-based technology, new operating and financial models, and the sort of control SaaS founders are familiar with. In this article, we have brought together actionable and useful advice for startup founders wanting to start a Web3 startup.
What is Web3?
No doubt, you’ve heard a lot about Web3 recently. Startup or scaleup founders learning about this have probably built — or are currently building — at least one company within what’s known as the Web2 space.
Web2 (or Web 2.0), as it’s now being called, is centralized. Software, apps, and platforms billions of people worldwide rely on for work, communication, shopping, finance, and numerous other things are based on Web2 technology, processes, and systems.
Social networks, eCommerce, online banking, search engines, even the entertainment platforms you engage with every day. All of these are centralized. A limited number of tech giants control vast swathes of the market, such as Google, Facebook, Apple, Amazon, Netflix.
Web3 is an evolution of this concept. Instead of centralized, the underlying technology is blockchain-based, usually open-source, and decentralized. Web3 has evolved out of the crypto sector. Based on the same concepts and technology, but iterating on the solutions that have emerged since the creation of Bitcoin in 2008.
Dr. Gavin Wood coined the phrase Web3 (sometimes also Web 3 or Web 3.0) in 2014. He is the co-founder of Ethereum, now the second-largest cryptocurrency in the world. Not only that, but Ethereum and the technology behind it play an integral role for blockchain business ideas and the content creator economy.
Dr. Wood now runs the Web3 Foundation, supporting decentralized technology projects, alongside Parity Technologies, a company building infrastructure for the Web3 ecosystem. He is a firm believer that the Web2 model is broken, and wants Web3 to be about: “Less trust, more truth,” Wood said in a Wired interview.
Is Web3 & the future of creator economy more than hype?
Many entrepreneurs and investors see this as the natural evolution of the internet, software, and platforms that connect humanity. Hence the huge bets being placed by investors.
In 2021, some of the largest and most successful investment firms started to put serious investment into the Web3 ecosystem. Andreessen Horowitz (a16z) invested $300 million in Web3/blockchain startups in 2018. Followed by two more funds. Now with Fund III, a16z has got $2.2 billion to invest. Tiger, Paradigm ($2.5bn), and Sequoia are also betting big on Web3.
In total, according to Pitchbook, $30 billion went into Web3 startups across 1,278 deals, with average seed funding going from $1.5 million to $3.3 million. Over 50 Web3/blockchain startups raised over $100m in 2021, and there are already 65 Web3/crypto-based unicorns, with 40 of these reaching that status in 2021. Coinbase Ventures put $3.7 billion into Web3/crypto-based startups last year, according to Crunchbase data.
In other words, the VCs responsible for creating the Web2 ecosystem — investing in everything from Facebook to Uber, Airbnb, Google, and thousands of other startups — are now getting behind the next iteration of the digital world.
From new B2B blockchain-based solutions to metaverse startups, and the infrastructure making it all possible, this is the future. Billions of investor dollars show that this is much more than hype, it’s the future of technology and connected ecosystems. Now let’s take a look at some top tips for startup founders wanting to launch a Web3 startup.
How to launch a Web3 startup: the best advice
Solve the problem
Firstly, as with any startup, you need to focus on solving a problem. Don’t jump into Web3 because it’s seen as The Next Big Thing. Only get involved in this ecosystem if it makes sense that blockchain-based, decentralized, and therefore, Web3 technology is the solution.
Not only that, but a Web3 solution has to make sense to the customers or users you want to attract. Whether this is B2B or B2C, there has to be a compelling reason to build a Web3 startup, for yourself as a founder, and for the company you want to build, starting with the market this will operate in.
In other words, every Web3 startup needs to have a clear understanding of the pain points and solutions you want to create. Followed by some clarity on the product-market fit you want to achieve.
Build a community
Web3 puts users in control as a result of the decentralized, blockchain-based model. This means you need to grow a community around the solution, even when a product is B2B. Effective community building means investing in marketing early on.
Thought Leadership, Content Marketing, Social Networks
Investing in marketing means being committed to long-term marketing-based growth. That’s the only way founders can establish credibility, grow the startup’s brand, and achieve product-market fit. It’s real-time, user-focused research in an open environment.
Web3 startups can’t do stealth mode. Instead, they need to engage with potential users/customers through content marketing, AMA’s, thought leadership, videos, PR, and across dozens of social channels, such as Twitter, Telegram, Discord, and others.
#4: Rely on trusted partners
Remember, with this space accelerating, there are now numerous media brands and FinTech companies getting into the same niche. You need to have the right partners to support your growth. Helping you raise investment, grow a community, and build your brand.
Partners such as DEIP, which offers Web3 founders a startup builder, known as Casimir. DEIP is a creator economy protocol exclusively for intangible assets, derivatives, and Web3-based projects, with tools such as Casimir, making it a valuable solution for Web3 founders wanting to build, grow, and scale.
Web3 is an exciting sector, with hundreds of unexplored opportunities for ambitious founders. With the right piece of advice, including reliable partners, investors, and a community, you could play a significant role in creating and shaping the internet of the future.