This year has been a rollercoaster for our industry. The start of the year continued the bull trend, DeFi was continuing to rise and there were serious expectations that things were going to continue to grow. This is while keeping in mind that anything is possible and an expectation of the bear market eventually returning, not even I could have predicted the collapse of Terra and the subsequent UST depeg triggering it all.
As things have started to stabilize, I feel that now was the right time to reflect on the last few months and answer the questions that get asked to me on a daily basis.
We continued to build through this market. When things looked like they were only going down, people would regularly approach me with the assumption that it would be impossible to raise money during this time. This is not the case.
Web3 is still an uncertain place
I have been in the industry since 2017 and a lot has changed. During that time, there were many companies that had raised millions of dollars but failed to deliver on their promises. At the same time, there were some companies with big ideas but no actual products or revenue. The core problem was that most of these companies lacked substance. They didn’t have any real business models or revenue streams behind them. They simply made grandiose promises about what they could do in “Web3.”
A bear market affects these types of projects. When trading slows and large sell-offs occur, everyone within the industry is affected. Those that survive need substance.
To me, bear markets provide us an insight into projects that — on the surface — look like they’re smashing it. They end up downsizing, making minor changes to their structure or in the worst-case scenarios, collapsing.
With Web3 still in its infancy, there is still a lot of work to do on ensuring mass adoption. Bear markets help siphon out those with bad intentions or no substance to their project.
It’s a great time to observe while we’re still at the building stage. There is not a huge amount of large Web3 companies out there, but there is still a huge opportunity.
The bear market presents an opportunity for solid projects
At first glance, you’d think that raising money during a bear market would be a silly idea.
It’s actually completely logical. Or, at least in this bear market it is.
With only a handful of good quality companies existing within Web3, Venture Capitalists (VCs) are fiercely looking at the best place to invest their funds.
There have been billions of dollars set aside by Web3 VCs to be spent growing companies with a quality product, infrastructure and vision.
FTX and a16z are two big VCs that have recently announced their available funds for projects; a16z has set aside $4.5 billion to invest in Web3 and they will look at things like Token Terminal to access how many projects are making good solid revenue streams.
Builders need to stop worrying about if the money is out there during a bear market. It certainly is for strong projects, so if you can prove your quality and delivery, you have an opportunity to access some of these funds.
Good companies and teams can almost always raise money
VCs also buy into people. If you have a quality team filled with passionate individuals, it should never be that hard to raise those needed funds.
If you believe your team has the ability to take things to the next level but you find yourself struggling to attract any interest financially from these VCs, it’s time to step back, analyze your idea and see whether it’s really as good as you think it is.
There’s no shame in believing in a product that the world just does not “get.” Serial entrepreneurs exist because sometimes ideas are not market-ready. This is the case in Web2 too, our marketing lead, Rob, previously worked for a company that had an advanced product with an incredible message.
The idea and execution went very well, but due to timing and reluctance to embrace new technology, the product didn’t hit the heights that it could’ve.
There’s still an enormous level of funding available. Self-analyze, iterate and take advantage of the solid team supporting you.
It’s important to take feedback, but if people “don’t get it,” perhaps you need to re-shape it.
The money is still out there
While there is a lot of talk about the state of Web3, the reality is that it’s still very early days. A lot has happened since we first started, but one thing remains constant: VCs have yet to deploy most of their capital into Web3 companies.
They’ve been instructed to too. Very few companies make the extraordinary revenues that are anticipated. VCs hire staff members to research and analyse. They look at dApps with value and they have the funding there to commit.
The bear market is a great time to consider raising funds for your project. The money is still flowing, the VCs have shown their interest in crypto and Web3, and if your product has value, it will easily attain their share of that fund.
Let’s crack on and build.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Rupert Barksfield is the project lead of Amulet.org — Simple Reliable Insurance for Everyone in Web3.
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.