Key Takeaways:
Investment in Web3 is on the rise as an increasing number of startups are turning to accelerator programs led by venture capitalists amid a burgeoning crypto bull market.
Accelerator programs offer vital mentorship and guidance to Web3 companies in return for early equity.
Venture Capitalists Increase Investments in Web3 Startups Amid Bull Run
Y Combinator, a prominent California-based startup accelerator has supported several crypto firms, including Coinbase and OpenSea. Andreessen Horowitz (a16z), another established venture capitalist, revealed its spring 2024 crypto startup accelerator on March 26th where it introduced 25 startups to a 10-week mentorship program in London, led by the company’s crypto team.
Jason Rosenthal, an operating partner at a16z, shared a list of projects from the program that includes founders from eight different countries: the United States, United Kingdom, Israel Japan, Poland, Romania, Switzerland, and the United Arab Emirates. Startups under a16z’s accelerator program receive $500,000 from the firm in exchange for 7% equity. Past participants include Flashbots and Phantom.
In November, the Avalanche Foundation and Ava Labs launched the first cohort for their Codebase accelerator, promising investments of $500,000 to $1 million.
Similarly, Helika, a Web3 gaming infrastructure company, has partnered with notable venture capital firms like Pantera Capital and Sfermion to allocate up to $50 million for startup participants in its new Web3 gaming accelerator, Helika Accelerate.
The crypto market has seen a resurgence in venture capital activity following the recent bull run. Recently, crypto-native VC firm 1Kx disclosed an oversubscribed $75 million fundraising round, while Hack VC finalized a $150 million round in February.
Web3 Founders Warned About Potential Predatory Actions by VC Firms
Sam Lehman, principal at VC firm Symbolic Capital, emphasized in a recent X post the importance of building robust crypto accelerators and the vital role they play in fostering community among founders within the network-centric Web3 ecosystem.
He highlighted the rise in new crypto accelerators that are driven by funds aiming to boost their brand and deploy capital into the market quickly. However, Lehman warned crypto founders to be cautious of potentially predatory terms that some accelerators offer.
He cautioned that certain accelerators use the early stage of projects to invest and propose ‘value-add’ as a way to come in and take big positions in those companies immediately. Lehman asked crypto founders to “think twice” about whether the terms they accept from an accelerator are worth what they receive in return.
Web3 Gaming Sector Witness Huge Investment Activity
The Web3 gaming sector has also witnessed a steady increase in investment activity. On March 25th, Web3 modular infrastructure firm 0G Labs closed a $35 million pre-seed funding round that was participated in by over 40 crypto-native institutions, including Hack VC and the Blockchain Builder Foundation.
The funding will be used to build out a full-stack blockchain-based solution for training, deploying, and running artificial intelligence models. This round also represented one of the largest initial startup funds for a company operating at the intersection of Web3 and artificial intelligence (AI).
For comparison, OpenAI, the Microsoft-backed AI startup behind popular large language models (LLMs) ChatGPT and Dall-E, raised only $120,000 in its pre-seed round back in August 2016. Since then, the company has been riding on the wave of success from its ground-breaking AI technology to reach a current valuation of around $80 billion as of February 2024.
