Venture Capitalists And The Role In The Web3 Evolution

Technology rules the world today. The most valuable companies in the world are those that can harness the power of their technology and become more resolute over time. So, even if you’re not a native tech company, it will be virtually impossible for you to make headway in today’s world if you don’t have a tech function in your business model.

However, for native tech companies, investment is also a key driver of success. This is why many of them tend to raise funds and vie for more capital. The dream and skills to build something impressive are already there, but everyone needs money.

For tech companies, this money is readily available in the form of venture capitalists. Essentially, a venture capitalist’s job is to provide funding for companies at different stages of their development. Most times, these companies fund you in exchange for a stake in your company. They could choose to nurture that stake over time and reap the gains or just exit - that is, selling their stake down the line when they’ve recouped their investment.

The Evolution Is Here

As we already know, the internet that we all love is changing. There’s a growing shift towards Web3 - an innovation of the internet that will bring better control and confidentiality in terms of data handling. Like Web2 before it, Web3 will only come to life when we have companies and protocols that are already espousing some of its core principles.

This isn’t to say that there aren’t already products that are getting people ready for the transition into Web3. We have the Super Protocol, a cloud-based protocol that allows for seamless collaboration while still keeping data completely confidential. The Super Protocol works with blockchain and confidential computing technology to offer a simple-to-use and highly secure cloud platform for everyone to use.

While cloud computing remains a critical part of the internet today, the Super Protocol is ensuring that we can also have it when the internet inevitably shifts to Web3.

Still, this is just one tool in one space. The tech landscape is much bigger than cloud computing alone, and companies that are looking to build Web3 versions of what we already have will need funding. So, venture capitalists will have a lot to cover.

Much-Needed Funds Come From Somewhere

As explained earlier, the primary role of a venture capitalist is to offer funds. These companies are adept at recognizing potential and harnessing it quickly. They know when a company has a good product or service, and they’ll be the first to hop on the bandwagon when it’s time to fund.

At the same time, these venture capitalists also offer a critical component for company growth - access. Beyond just the funds, venture capitalists also ensure that companies they back are able to access different places and tools that they might not necessarily have been able to get on their own. Being backed by a company like Andreessen Horowitz or Kleiner Perkins offers immediate access to an ecosystem of like minds and builders, many of whom will be thrilled to collaborate with you.

Then, there are the little perks that venture capitalists offer - including the ease of setting your company up, legal advice, compliance, and much more. Their goal is to take out some of the major hurdles that young companies face when it’s time to grow. This way, you can focus on the most important thing - building for Web3 and taking the best possible product to market.

This symbiosis is a perfect one that should work in an ideal universe. The venture capitalist puts up for you to grow, and you reward them by delivering returns on their investment.

The Problem Of Control

While all of this is true, it is also worth noting that venture capitalist involvement in tech isn’t always beneficial. These companies primarily care about one thing - making money. And, if they see an opportunity that you should take, they could use their influence to steer you in that direction.

When you enter into a funding agreement with a venture capitalist, you give up a portion of the control. You could give them a stake in your company or offer them board seats. Whichever it is, the company now holds voting power. Some venture capitalists only focus on driving revenue and making your company profitable as quickly as possible. And, this means that they might exert their influence on you.

With Web3, the goal is to put users in control of pretty much everything - their data, their revenues, their money, etc. However, doing that will also diminish a company’s revenue streams - and investors won’t be happy about that. As you build a Web3 protocol, it is important to remember that you have investors and they will want to see returns on their investment.

Several top names in tech have already bemoaned the fact that big venture capitalists are already investing in Web3 projects because they know the internet is changing. So, they’re looking for a way to control the biggest companies that will emerge when Web3 does - just like they control some of the biggest tech companies in the world today.

This focus on profits alone might blind some venture capitalists to the true aim of Web3, which is to improve the internet we have today. However, it doesn’t necessarily mean that the future of Web3 is doomed. We simply need to find venture capitalists who believe in this dream and are willing to back it.