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Web3 startup are facing a gigantic declivity in financial support : Earlier last class , I estimatedthat web3 support would drop by 73 % . In world , second - quarter funding in 2023 seem even bad — a full 76 % declivity from the previous yr ’s figures , according toCrunchbase . In the first half of 2023 , web3 company raised about $ 4 billion ( miniscule in comparing to the nearly $ 16 billion invested in the first one-half of 2022 ) , and investments continued to decline through the end of the year .
Most startups have been challenge by the tepid fundraising market , with AI being the exclusive bright berth . It ’s clear that investors are hesitating to fund crypto and blockchain - inflected businesses right now .
Why ? The last yoke of years have been a grizzly bear of a market for web3 . The FTX debacle cast a long Bahamian apparition over the trustiness of counterparties . Just a few months before , the ecosystem suffered through the Three Arrows and Luna debacles , which destroyed billions in note value overnight .
A slew of regulatory actions against some of the biggest names in the category have emphasize regulatory risk . Active developer in web3 have fall down , lagging a fall in both user and overall transaction volume on exchange .
But there ’s more to web3 than this boom - and - tear cycle per second , and these dark sky mask the considerable potential of decentralized databases . Web3 introduced a novel way of building software , an computer architecture that will become increasingly important with government enacting new data regulative regimes .
U.S. states , European country , and Asian state each have their own rules about managing data . With additional regulation and complexness inevitable , web3 ’s database enable technical judo . Rather than companies managing datum for users , users will manage their own data point and software products will apply it only with exploiter ’ permission .
We wo n’t see Web 2.0 companies evolve into web3 companies . Instead , web3 society will become web 2.0 companies , sell their refreshing infrastructure to classic package buyers .
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Common roots to bridge the GTM divide
In the mid-2010s , fundamentally every society evolved from entanglement 1.0 to Web 2.0 . World Wide Web 2.0 companies are n’t really going to transmute into decentralised platform . But to survive , web3 inauguration need to acquire to market and trade like their centralised brothers . The web3 software system market place is just too modest today — few than 60 companies generated more than $ 5 million in tax income on chain in 2022 .
It ’s helpful to recollect that the core technology underlie web3 is not so dissimilar from existing distribute systems . One example is the raft consensus algorithm that waspioneered in Stanford in 2014and is used by many distributed databases today . Raft continue databases in unlike regions in synchronicity . Raft is an evolution of another consensus algorithm that has been used in crypto currency .
Multiparty calculation , a technology at the core group of blockchain , also is an important fixings in vane 2.0 distributed systems . It ’s an essential fixings in data clean rooms , technologies that give up two company toshare datasetswhile maintaining the concealment of the underlying exploiter ’ data .
The nuances of each special technology are not important . The broader stage is that mete out Web 2.0 and decentralised web3 infrastructure technologies have common roots — and therefore more than we might think to bridge the go - to - market ( GTM ) divide .
How web3 startups can start fresh
To survive , web3 startups must expand their buyer base to steel - new market that showcase a great willingness to spend , gift and innovate . Web3 startup will discover opportunity vying in the cloud software program and substructure market place , which constitutes 40 % of the $ 1.5 trillion in global IT drop .
But how can they do so ?
For example , morethan 15 statesand71 % of countrieshave enacted or drafted data privateness laws . As the morass of regulation grows , compliance price will increase . At the same time , Google will depreciate the third - party cookiejust asApple decommissioned its identifier for advertisers ( IDFA ) , establish personalization more unmanageable .
Blockchain technologies have the power to combine the welfare of personalization with the privateness of crypto — enabling user to custody and manage their own data point and letting publisher customize their sites to users while maintaining their privacy — a promise that can be essay to any regulator .
Encrypting preferences on the public blockchain , and enabling publishers to selectively unlock them with substance abuser consent , replicates cookie functionality in a way that satisfy outside rule .
There are legion other use cases that employ the power of mix Web 2.0 and web3 to satisfy modern demands for privateness and personalization . For web3 to cross the chasm , these are the arena to focalise on .
Turning theory into action
When I establish Theory , which vest up to $ 25 million in early - degree software package companies that leverage applied science discontinuity into GTM advantages , we aimed to focus in part on the superpower of web3 ’s decentralized databases .
Our enthusiasm has n’t wane — because of the intersection of World Wide Web 2.0 and web3 software system we see on the horizon today . Already we ’re go out web3 companies meet the moment , looking to the past to insure their future .
