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This year’s bear market trajectory should be seen as an opportunity for Web3’s founders to raise capital and build cutting-edge products. Some of today’s most solid businesses were built during market downturns. Founders now have a real opportunity to go beyond the hype and find the perfect business partnership, ensuring they are building products and services that meet genuine, real-world needs.
Determining the best way to fund your product and company is paramount and not a decision to be made in haste. In particular, it is a move that requires a keen understanding of how to thrive in the face of an unfavorable market. It is important to convey
With only 0.05% of startups able to secure venture capital (VC), one of the basic requirements in attracting investment is that the project can demonstrate a product market fit built for success. While not applicable to all investment scenarios, it is important to demonstrate that your product will be useful to your target audience during the funding process. So what exactly is Product/Market Fit?
As decentralized finance (DeFi) solidifies itself as one of blockchain’s most compelling value propositions, many innovative DeFi solutions have come to the fore.
Having worked relentlessly to build the best possible product on the market, you may be ready to explore different avenues of raising capital at your disposal. Startups can raise capital through non-traditional means that have emerged in recent years, such as Decentralized Investment Autonomous Organizations (DAOs). The availability of crowdsourced funding at Web3 raises the question of the traditional venture capital value proposition and whether it is still needed in the industry.
The reality is that most of Web3’s startups are still seeking investment from VCs. We have seen over 16,000 companies worldwide receive capital backing from VC firms. This is likely due to the understanding that VCs can offer value far beyond just providing capital. Their business experience, network and additional services make them attractive future partners.
Unlike non-traditional investment mechanisms, VC investors are likely to support the startup for life, helping prepare for future funding, and at the same time if the startup’s business faces hurdles along its roadmap. have the ability and discretion to intervene in
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VCs also add value to startups through business acumen and, in many cases, decades of experience in founding and scaling businesses that can be used to develop strategies for success at every stage of the business lifecycle. provide the experience of The brand reputation that comes with investing from certain players should not be underestimated either. Such associations for startups in the early stages of their lifecycle can be a valuable resource for many projects to cut through the noise and establish themselves in the industry.
With extensive industry connections, VCs can also leverage this to play a key role in securing skilled talent for their portfolio projects. Innovative strategies such as hosting hackathons and developer events have proven to be effective means of attracting such talent.
Coding language proficiency has traditionally been a major barrier for developers entering the Web3 industry. Many Layer 1s use uncommon coding languages, making it difficult to attract developers to build their applications. VCs can invest in training and education programs to enable a talented new cohort of seasoned developers to transition into the industry and help projects find the right talent for their business.
Changing market conditions are driving more attention to business fundamentals and better products and services are being developed by talented teams to address relevant market needs. Startups should also use this period to focus on nurturing and growing their community. This has a significant impact on the success and long-term prospects of a venture. In fact, many of the current industry giants such as Solana, Coinbase, Chainalysis, and Uniswap were built during previous bear markets.
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A bull market usually sees startups and VCs hoarding money, prompting them to move forward without proper product-market fit. In contrast, a falling market requires teams to build meaningful implementations of products and services and carefully experiment with solid propositions. It’s also a time for founders to listen to the community and implement their feedback, allowing them to deliver a more robust product in the long run.
In many ways, the dynamic between startups and VCs can be viewed as akin to personal relationships. Establishing trust and investing in bonds through careful consideration and consideration can have far-reaching implications for both parties and their stakeholders. In life, there are no one-size-fits-all relationships. Ultimately, therefore, startups need to be patient until they find a partner who is ready and willing to rely on them for the future.
Marek Sandrik Principal at RockawayX, the venture capital firm behind the founders of Web3. After graduating with a BA in Economics and Business from University College London, he completed his MBA from the London Business School.
This article is for general information purposes and is not intended, and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent the views or opinions of Cointelegraph.
