The Strongest Way to Grow Web3 Is With Each Other

Starting a business is hard, whether it's a local restaurant or a Web3 platform. And the numbers back this up, with some sources estimating a 50% failure rate within 5 years. For an endeavor as back breaking as starting a business, that is a sobering amount of failure and may steer many away from ever trying in the first place. But why exactly do businesses fail, and why are these numbers likely even higher for Web3-based startups? Let's dig into one of the key reasons, and look at how Web3 is using community-focused resources (like the AllianceBlock Fundrs program) to connect the right people and make Web3 startups powerful.

The Struggle Is Real

For traditional businesses, getting the funding required for even a modest endeavor can be very difficult.  With banks tightening up and interest rates rising, fewer businesses have the perfectly laid out plan that banks are willing to bet on.  Raising capital elsewhere, such as with family and friends, is great if they are both wealthy and generous. But many startups realize those close to them are more often one or the other, but not both. From the family/friend perspective, there is a lot of pressure to support someone you care about, even if you don't trust their vision, business acumen, or the belief of a market for the proposed startup.  And other than a few exceptions, startups of all types fall into the "need money to make money", so bootstrapping (though helpful) can only take you so far.  

Assuming a startup can successfully get a loan, the paperwork, bureaucracy, time commitments, and the wait can be annoying at best and devastating at worst.  For those opportunities where there is an open space where no one else has developed your innovation or a market for it, time is of the essence.  This wait can be endless, especially for fast moving industries.

Note, this is only for traditional startups.  With a still-evolving regulation, Web3 startups are not likely to find a bank loan for their business, and even if they could, the waiting involved is not very helpful in an industry that is constantly evolving.  While not impossible, it typically takes a business with major players and success already demonstrated to have a shot at traditional investment.  

Where does that leave the many different Web3 startups who are waiting to make their mark?  Thankfully, there are a few options much more likely than traditional finance, and they are within the Web3 ecosystem where there is a clearer understanding of Web3's potential.  This makes sharing one's vision much easier when your audience can grasp your value proposition.

Web3 Investment Options:  VC and Community

The more straightforward approach is to attract a Web3-focused venture capital firm.  However, that can be like saying "the best way to get famous is to star in a blockbuster movie."  While true, this is not usable advice for most people.  While VC's are the lifeblood of the Web3 startup movement, there are many, many different startups trying to get the attention of VC's, and those who already have connections are in the best spot to get it.  Certainly hackathons, good thought leadership, or excellent branding can gain their attention, and these strategies are genuinely helpful if you can accomplish them.  But the number of platforms who would like VC support and the ones that get it aren't the same.

While Web3 VC's shouldn't be ruled out, there is a growing trend in the Web3 community that combines elements of crowdfunding with the ability to gain community insight on a project.  While this trend is growing, the leading platform is AllianceBlock's Fundrs, which was set up by AllianceBlock to fill this specific need.  While an easy comparison could be made to Kickstarter or Indiegogo, Fundrs and Web3 programs like it are actually in a unique position.  The reason for this is that Web3 is still in its early years, and with new growth in an industry comes passion, large innovations, and the excitement from a close-knit community.  Unlike Kickstarter, which is a general purpose platform, Fundrs is specifically set up to display potential projects and connect them with community members who want to support them.  

For the startup teams, finding a stage like this and an audience that understands you is huge.  And for  those who are looking for a project to invest in, it's helpful to find a platform that offers the ability to see what the community is doing, get a better understanding of the opportunities (and risks) of joining in, and finding a project that not only looks like a strong investment to you, but that is also in line with your own passion and interests.

While community funding platforms may differ, there are a few key elements to note about Fundrs.  The social aspects allow the community to better share and discuss the merit (and reputations) of the startups presenting their ideas.  There is also the chance to learn from others or share your own expertise, which can benefit the community (including you) and could also help attract key talent and knowledge to the startups that need them.  Finally, as someone investing there are a number of platforms that create DAOs, allowing their supporters to have a real say in the direction of the business.  This also creates a deeper community-mindset, which is showing to add a more representative look at the wisdom of the community and their overall desires for its future.

AllianceBlock's Fundrs also introduces quite a revolutionary facet to this crowdfunding platform – milestone-based financing – meaning, the start-ups seeking funding on the platform must set measurable goals and reach them in order to unlock capital they've raised. This way, the funders on the platform can be sure the project they invested in is making progress.

Wrapping Up

With any newer industry, there are additional challenges for those brave enough to innovate and make a difference.  Web3 is certainly no exception, and with its mix of finance, utility, decentralized leadership, and international seamlessness, it is on a whole new level of both opportunity and complexity.  The world is more connected than ever, and that connectedness has brought together knowledgeable teams who have strong Web3 plans.  Thanks to innovations like community-based support, funding, and feedback, these teams have their best chance at success.