Observation: VC is eating the whole web 3.0

Some institutions predict that the market size will exceed 50 billion US dollars in 2022.

Web 3.0 is becoming the focus of VCs.

On March 16, 2022, Microsoft, Japan’s Softbank and Singapore’s Temasek announced the completion of a new round of financing of $450 million for the startup ConsenSys, making a big push into the Web 3.0 field.

On March 17, venture capital firm The Spartan Group announced the launch of a $100 million Web 3.0 fund.

Also in March 2022, Sequoia Capital is also making frequent moves on the Web 3.0 track. After leading a $450 million investment in blockchain company Polygon in 2021, Sequoia Capital led a $12 million seed round in EthSign, a Web 3.0 electronic agreement platform, on March 9, 2022; and on March 7 Participated in a $32 million funding round for Espresso Systems, a Web 3 privacy-focused system.

Earlier, Sequoia quietly launched a $600 million startup focused on investing in Web 3.0-related technologies.

Michelle Bailhe, the head of the fund, believes that whether it is gaming, consumption or live shopping, there will be a shift to Web 3.0, just as people are shifting from PCs to mobile internet.

Regardless of whether other VC firms are ready to embrace Web 3.0 at this time, this capital giant, founded in 1972 and previously only investing in energy, finance, and the Internet track, has set an example: turning its attention to a more cutting-edge new generation of Internet technology .

In fact, VC has already entered the Web 3.0 staking war.

More aggressive is another Silicon Valley venture capital platform: a16z.

On March 17, 2022, a16z and other institutions completed a $200 million capital injection into the Aptos project of former Facebook team members.

In January 2022, a16z is raising $4.5 billion to form a new fund, of which $1 billion will be used for its seed investment in Web 3.0.

The fund even attracted domestic funds to subscribe. A-share listed company BlueFocus recently announced that it will use its own funds of no more than 35 million US dollars to participate in the subscription and become its limited partner.

Some institutions predict that the market size of Web 3.0 on the application side will exceed 50 billion US dollars in 2022.

With huge space and influx of capital, Web 3.0 has ushered in the spring?

Why Web3.0?

Understanding Web3.0 is not a simple matter. Here is a popular explanation about Web3.0: 1.0 can only read information, 2.0 can read, write, and write information, and 3.0 can read, write, and possess information.

Before 2004, the Internet was in the Web 1.0 era. Its main feature was that people obtained information one-way from the Internet, and information and knowledge were produced and organized by large companies, such as Yahoo, Sina and other portals.

Since 2004, the Internet has entered the Web 2.0 era. More knowledge and information are produced by users, and commercial organizations have built platforms to collect user information for effective information distribution.

Sharing an opinion on Zhihu and sharing an original song on Douyin are all based on Web 2.0 operations. In addition, Weibo, Youtube, and Xiaohongshu are all products of Web 2.0.

All of these Internet platforms rely on selling user information and distributing advertisements as their main revenue. According to statistics, in 2021, the advertising revenue of Pinduoduo and Weibo will account for more than 80% of the total revenue, while Kuaishou and Baidu will exceed 50%.

But is this reasonable? Imagine that creators spend a lot of time and energy, but the platform is the biggest beneficiary. Not only have we become a profitable tool for large corporations, the privacy of personal data has also been threatened. People are gradually realizing the problems of big data killing, privacy abuse, and induced advertising.

In the era of Web 2.0, due to the regulatory pressure of various government departments on Internet data, user data privacy management has gradually been paid attention to by Internet platforms. We saw that Facebook was sent to a hearing, and Apple was under pressure to transfer the IDFA permission to users.

The voice of the data right back to users is getting louder and louder. In 2015, Tim Berners-Lee, the father of the World Wide Web, Gavin Wood, the co-founder of Ethereum, and others proposed Web 3.0 with the goal of protecting user privacy, aiming to “decentralize” the Internet: transfer personal information to users for safekeeping , users can choose to send to the platform, or choose to keep, these data cannot be traced and will not be leaked.

In the process of evolution to Web3.0, there are many hybrid products between Web 2.0 and Web 3.0, such as the NFT trading platform Opensea, where art creators hang their works on the platform to maximize profits, and the platform charges The fee is profit, which is similar to the combination of traditional e-commerce and decentralized trading models.

In 2021, with the popularity of the NFT trading market, the transaction volume of Opensea will surge. The data shows that the monthly transaction volume in August alone exceeded 3.4 billion US dollars. Previously, OpenSea received a large amount of financing from well-known investors such as a16z and Coinbase at a “low valuation” of $1.5 billion.

In addition, according to the statistics of China Investment Network, overseas VCs have already entered NFTs such as Bridgewater Fund, Sequoia Capital, VISA and other institutions.

Why is there so little investment in China for Web 3.0?

Meng Bo, a blockchain practitioner, introduced to China Investment.com that most Web 3.0 projects are small in scale, and the market will not see returns in the short term, and most VCs use traditional investment structures, and only large-scale equity projects can be selected in their investment portfolios. Screened out most Web 3 targets.

Taking Sequoia Capital mentioned at the beginning as an example, its structure has been adjusted in 2021, breaking the traditional VC’s ten-year cycle investment model, and trying to create a permanent open structure, which is a direct investment Web 3.0 investment return cycle. Long-term, difficult-to-assess projects have removed institutional barriers.

Michelle Bailhe, head of the fund, believes that VCs, like all living things, either evolve or die. And predicts that in the next ten years, the number of users and developers of Web 3.0 will increase 10 times or even 100 times, and Sequoia Capital will continue to invest hundreds of millions of dollars.

So how does Sequoia pitch the project? Michelle admits that most Web 3.0 projects are found on Twitter. Investment China found that Michelle has 5,000+ followers on Twitter. In her watch list, the first few users are all Web 3.0 entrepreneurs, and many of them are founders of star projects such as Paradigm, Coinbase, and OpenSea invested by competitors a16z. people.

According to Mark Anderson, founder of a16z, the reason why they were able to invest in these small Web 3 projects as angel investors in advance is that their funds can “offer as small as $25,000 to hundreds of millions of dollars. Cheque”.

The long-term and small investment strategy is undoubtedly successful in the blockchain track. According to statistics, in 2021 alone, 43 companies in a16z’s portfolio have completed IPOs or mergers and acquisitions, and their business scope involves emerging concepts such as Web3.0, DAO, and NFT. One of the famous cases is the Coinbase shares that a16z has held since 2012, and the return on the IPO day has reached an astonishing 4,000 times.

Trapped and traditional investment strategies, there are very few Web 3.0 projects that domestic VCs can focus on.

“Most investors will claim that they are investing in Web 3.0 and even the next-generation Internet, but in reality it is still the logic of Crypto.” Mengbo said he was not optimistic about domestic Web 3.0 investments.

From another perspective, the liquidity regulation of Token in the domestic market also inhibits the activity of Web 3.0 entrepreneurship. Zang Chengdu, the founder of NFT platform, believes that Token was the most mainstream financing channel for blockchain projects in addition to equity financing. If the community operation and maintenance is good, the Token issued by it will have the advantages of high liquidity and high premium at the same time; Liquidity, investors naturally have no enthusiasm, but turn their attention to overseas markets.

The debate about Web 3.0

Of course, crazy capital blessings can’t make everyone optimistic about Web 3.0. Such an advanced and magical concept has attracted veteran industrialists to stand up and bombard this new term that was literally “fired” by VCs.

Former Twitter CEO Jack Dorsey is extremely dissatisfied with Web 3.0: “You don’t own Web 3.0, VCs and their LPs own it, and Web 3.0 will never escape their (funding) stimulus.”

Tesla CEO Elon Musk was equally skeptical, tweeting: “Has anyone really seen Web 3.0? I haven’t, anyway.” He posted a picture to satirize those who sell Web 3.0 concepts to everyone, and Someone who motivates users to join the DAO.

“It’s between a and z,” Jack Dorsey replied below Musk’s tweet, suggesting that Web 3.0 is being controlled by a16z.

A16z partner Chris Dixon countered: “First they ignore you, then they laugh at you, then they scold you, and then it’s your day of victory.”

Subsequently, Jack Dorsey took down Coinbase CEO Brian Armstrong and a16z founder Mark Anderson on Twitter, and Anderson was not polite and directly blocked Dorsey.

So, is Web 3.0 really a new tool for VCs to cut leeks?

A blockchain project manager shared her point of view with Touzhong.com. Web 3.0 does exist, but it is also a concept of differing opinions. Many so-called Web3 projects in China have not even achieved decentralization in nature. At present, the track is mixed.

Another blockchain technician introduced to China Investment Network from a technical point of view that most of the current Web 3.0 projects can only be regarded as Web 2.5. The basic layer of data computing restricts the development of Web 3.0. “Chain computing” has not yet been solved. At present, the consensus mechanism and cross-chain alone are far from the standard of Web 3.0, but it may be realized in 5 years.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/observation-vc-is-eating-the-whole-web-3-0/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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