Why are there so many Web3 startups?
<p>This week, Pitchbook published their latest <a href="https://pitchbook.com/news/reports/q3-2022-emerging-tech-indicator" rel="noopener ugc nofollow" target="_blank">Emerging Tech Indicator</a> (ETI) report which tracks early stage investment activity amongst the world’s most successful venture capital firms to “<em>gauge which areas of tech are grabbing VCs’ attention</em>”. In Q3, the sector that received the largest amount of VC dollars according to the ETI report was Web3 with nearly $900 million. That’s more than fintech, biotech, security, ecommerce, gaming, and dozens of other mainstream industries.</p>
<p><img alt="" src="https://miro.medium.com/v2/resize:fit:700/0*Bx8uLnqHSGpbqZUm" style="height:356px; width:700px" /></p>
<p>ETI funding by sector in Q3 2022</p>
<p>And Q3 wasn’t the first time that Web3 topped the ETI report. In fact, Web3 has led the ETI rankings for 5 consecutive quarters now. Over the past 12 months, there has been over $6.5 billion of ETI capital invested into Web3, which is more than double that of the next highest category of fintech at $2.7 billion.</p>
<p><img alt="" src="https://miro.medium.com/v2/resize:fit:700/0*6p3S4tqQTWBJt8Sb" style="height:262px; width:700px" /></p>
<p>ETI funding by sector over the past 12 months</p>
<p>Even with all the ongoing challenges across cryptocurrency, which has seen its combined market capitalization decline by 2/3 since last November, investment interest in the sector remains stronger than other industries. Why? <strong>Because entrepreneurs still want to start Web3 companies</strong>.</p>
<h1><strong>What is Web3?</strong></h1>
<p>Building a good Web3 startup is hard. Explaining what makes a startup Web3 in the first place is even harder. Here are a few attempts. Leading Web3 investor <a href="https://future.com/why-web3-matters/" rel="noopener ugc nofollow" target="_blank">A16Z</a> describes Web3 as “<em>the internet owned by the builders and users, orchestrated with tokens</em>”. Ethereum co-founder <a href="https://www.cnbc.com/2022/04/20/what-is-web3-gavin-wood-who-invented-the-word-gives-his-vision.html" rel="noopener ugc nofollow" target="_blank">Gavin Wood</a>, who coined the term Web3, describes it as “<em>an alternative vision of the web, where the services that we use are purely algorithmic things hosted by everybody</em>”. Web3 has also been <a href="https://www.nytimes.com/interactive/2022/03/18/technology/web3-definition-internet.html" rel="noopener ugc nofollow" target="_blank">called</a> “<em>the hyperfinancialization of all human existence</em>” and where “<em>every product is simultaneously an investment opportunity</em>”. Pretty confusing right?</p>
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