Friend or Foe? Lead Investor Questions VC Funding For Web3 Projects

Lauren Capelin who works as the lead investor at one of Australia’s biggest startup accelerators raised concerns over traditional venture capital funding for some Web3 startups, warning it might, in reality, hinder rather than help firms build the next-generation tech.

In an interview with a local news outlet, Capelin, a principal at Startmate told that while traditional venture capital funding might benefit some companies in the emerging industry, for others it was potentially “dangerous”. Reading the same, the community strategist noted,

“Part of me questions where and how Web3 projects require traditional investment. That’s not to say they don’t need it, but I wonder what the case is for it when community capitalization options are more available.”

As a matter of fact, several Web3 startups often receive funds through less traditional methods, such as selling their platform’s tokens [like shares with additional utility] to users through a token sale or establishing themselves as a decentralized autonomous organization [DAO].

This is what investor fear

DAOs secure funds by selling tokens to a community of people, who hold individual voting rights over the direction and purpose of the organization. Other DAOs often require members to prove their worth in terms of skills or services they can bring to the table. Many of these DAOs then vote on what proposals or projects are fund-worthy.

With respect to traditional venture capital investments, Capelin worries that Web3 projects would instead suffer as opposed to benefitting.

“I think the dangerous thing is venture capital funding these communities. But there’s definitely space for large-scale investors in capitalizing the core infrastructure of this space [through] more traditional sources of funding,” She added.

Capelin isn’t the first to raise the alarm bells, with Twitter founder Jack Dorsey recently accused leading Web3-friendly large-scale investors such as Andreessen Horowitz of looking to monopolize the space, warning “you don’t own Web3, the VCs and their [limited partners] do.”

Dorsey, one of Bitcoin’s biggest supporters has pointed out the fact that a small number of venture capital firms have managed to grab the majority of the web3 market and called out Andreessen Horowitz, a.k.a a16z, as being at the top of the list.