Who is betting on Web3?

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Text / Zhou Yifei

Source/Wired Insight (ID: lxinsight)

With the popularity of the metaverse concept last year, Web3 has also become the hottest new term this year.

From big to top VCs, to small entrepreneurs in the currency circle, all of them are talking about topics related to Web3. What is Web3? Different from the concept of “Semantic Web” and “Global Brain” of Web3 proposed by the inventor of the World Wide Web, Tim Berners-Lee in 1998, the popular Web3 today represents more of the next era of the Internet. Among them, this concept has received the most attention in the field of blockchain and cryptocurrency.

It has to be said that the distributed storage, decentralization concept, and asymmetric encryption technology represented by the blockchain are all in good agreement with the concept of Web3. Therefore, it has become one of the most promising areas to specifically implement Web3 scenarios. The popularity of NFT is also one of the signs of the development of Web3.

Investors with the sharpest sense of smell have already sensed it.

Internationally-renowned venture capital institutions such as Sequoia Capital and Goldman Sachs started investing heavily early on. Web3 has become the hottest concept in the current VC circle, and huge amounts of financing are constantly being born.

“The industry has been paying attention to Web3 for a long time, but the popularity has not picked up. However, we have only focused on this track since the end of last year.” A dollar fund investor admitted to Wired Insight, “The era of Web3 will definitely come. , although it is still very young, the development trend is irreversible. It is just that there is still a long way to go to achieve this goal.”

The far unrealized goal does not stop the outside world from discussing it. Baidu Index shows that as early as 2011, there was discussion of Web3, but it was not until the beginning of this year that the search volume exploded, and the popularity has remained high since then.

Web3 ignited the investment enthusiasm of VCs, and also entered the attention of entrepreneurs.

Many companies and entrepreneurs have joined this hot track, even geeks who have never known Web3 before.

The explosion of the concept of Web3 reflects the magic of the technology industry. In the eyes of many Web3 supporters, a brand new Internet era is slowly kicking off in the battle of capital.

Well-known VCs crowd into Web3

“How to Make Sure the Web3 Revolution Happens in America?”

This is what happened at a hearing on the cryptocurrency industry in the U.S. Congress on December 8, 2021. At the convention, Republican Rep. Patrick McHenry asked the encouraging question.

Just like when the concept of the metaverse came out, technology and capital bosses staged a “war of words” and then triggered a sensational debate in the capital field. After the content of the hearing came out, the same plot came to the stage again.

Twitter founder Jack Dorsey publicly accused in undefined that Web3 was controlled by venture capital institutions, and pointed the finger at the well-known venture capital institution a16z, which is one of the dominant players in the Web3 field and its founder is Mark Anderson.

Later, Tesla chairman Elon Musk also joined Jack Dorsey’s team, bluntly saying “I don’t think Web3 is real – it looks more like a marketing slogan than reality now.” Even public mockery” Has anyone seen Web3? I didn’t find it.”

It is worth pondering that the two protagonists in this debate, Mark Anderson and Jack Dorsey, are two representative figures in the era of Web1.0 and Web2.0. The Netscape browser founded by the former has caused Microsoft, which is engaged in vicious market competition to suppress it, to be severely damaged by anti-monopoly; the Twitter created by the latter has allowed “more people to have their own voices.”

Source Report “Web3.0 of the Metaverse Series: A New Paradigm Opens a New Stage of the Internet”

Now the two are fighting each other again, and both point to one thing: more and more VC money is pouring into Web3. Among them, A16Z may be called the investment myth in the field of Web3.

Founded in 2009, a16z has not been established for a long time, but its investment process has run through the entire mobile Internet era. He has invested in many star companies such as Facebook, Twitter, Instagram, and Github, and has made a lot of money. And as early as ten years ago, it has begun to lay out in the field of Web3.

In 2013, a16z bought shares in undefined (the largest cryptocurrency exchange in the United States) at a price of $1 per share, and subsequently participated in Coinbase’s subsequent 8 rounds of financing.

It was also after starting its investment in Coinbase that a16z made more aggressive bets in the field of Web3.

After raising its first crypto fund in 2018, a16z has launched four crypto funds. In addition, it recently established a new $600 million game fund focusing on Web3.0/blockchain field “GAMES FUND ONE”, which further expanded its investment in the field of Web3.0.

These funds, with a total value of over $7 billion, have participated in more than 70 other projects besides Coinbase. Among them, projects such as the world’s largest NFT trading platform OpenSea and the decentralized content publishing platform Mirror are included.

It can be said that the vigorous layout of a16z in Web3 surpasses almost all traditional VCs. One Google executive couldn’t help but sum up a16z’s style with “they’re like lunatics, domineeringly putting a foot in every deal.”

Capital is looking for leverage to move the old world with a keen sense of smell. However, other venture capital giants are half a beat slower than A16Z, such as Sequoia Capital.

Earlier, Sequoia Capital remained relatively silent on its interest in cryptocurrency/Web3, perhaps because of its relatively full layout in the Internet field in the past few years. However, the acceleration of innovation in the traditional Internet field is gradually decreasing. Therefore, as seen from the outside world, Sequoia has recently started a large wave of intensive investment in the Web3 field.

Although not as good as a16z, from January to April 2022 alone, Sequoia Capital has invested in 17 Web3 companies at a rate of almost one investment per week.

One notable case is that when investing in Web3 infrastructure company EthSign, an electronic agreement signing platform, the three divisions of Sequoia VC – Sequoia Capital, Sequoia Capital India and Sequoia Capital China all backed the round . This is the first time that all three of Sequoia’s divisions have participated in a financing at the same time.

There are also plenty of dollar VCs who choose to bet. A report from Crunchbase, a foreign research organization, pointed out that in 2021, 152 venture capital companies have invested in Web3.0 unicorn companies. Among them, Coinbase Ventures (19 deals), Digital Currency Group (14 deals), Andreessen Horowitz (12 deals), Ribbit Capital and Pantera Capital (both 9 deals) ranked in the top five.

In addition to the top VCs, small and medium-sized VC institutions are also close behind.

“Many peers who follow the TMT field have turned to the Web3 field.” A VC institutional investor expressed emotion to Wired Insight. After the explosion of the Metaverse last year, he began to frequently contact related concept companies. “At that time, I wanted to find a good target, but in the end it was fruitless, so I temporarily slowed down the research progress.”

The core elements of “digital identity” and “economic system” in the metaverse are closely related to Web3.0. For Web3, the above-mentioned investors believe that the distance is really coming, and it will take a long way to go. However, it is not important for the outside world to evaluate Web3. It is not a bad thing if more companies can be stimulated to achieve innovation through the concept of Web3.

Although it is too early to predict the investment trend in one or two years, the capital force, which is the outpost of the industry, is rushing to make arrangements. The “Web 3.0 war” between VCs is becoming more and more intense.

A new wave of entrepreneurship is here

“I just quit my job and I’m ready to start All in Web 3.0. Do you have any suggestions?”

A product manager who has just resigned from a major Internet company has just completed the resignation formalities and immediately shares his joy of entering a new field on social media. This is not an exception.

“In the field of Web3, I am proud to participate in these era-significant work content.” Another mid-level employee who has worked in a large Internet company for more than ten years expressed emotion to Wired Insight.

Housing allowances, car allowances, meal allowances, and various welfare benefits can’t stop more and more employees of major Internet companies from leaving the Internet and rushing to Web3. Even Wang Huiwen, the co-founder of Meituan, changed his instant (social app) signature to “Learning Crypto”.

Wang Huiwen’s personal signature, the source of the picture is instant App

The domestic talent market is still like this, and the foreign market is even more vigorous. Products, technologies, and platform companies emerging under the Web3 concept also target these talents. What’s more, the growing investment fever has further pushed up this wave.

An obvious variable is that when the mobile Internet emerged, there was a wave of entrepreneurship and the birth of many unicorns. Now, a new round of entrepreneurial cycle has begun.

Some entrepreneurs with a keen sense of smell have found business opportunities. “We are developing the NFT-Web3 project jointly with a leading domestic brokerage company.” A community e-commerce co-founder explained to Wired Insight, “At that time, it will be sold on Taobao in the form of a blind box. Not high, only a few dozen dollars each.”

The most successful similar case is that Jay Chou’s trendy brand PHANTACi cooperated with NFT distribution platform Ezek to release the first NFT project Phanta Bear, which was sold out on January 1st.

Compared with the “small fights” of individual studios, several star companies have been at the forefront of leading the trend.

Every cryptocurrency enthusiast should have heard of the “Coinbase Effect”. That is to say, once a certain token is listed on Coinbase, there will be an astonishing increase in the secondary market, which is enough to show the influence of Coinbase in the industry.

Coinbase official website, Tuyuan Tianfeng Securities Research Institute

As one of the world’s largest cryptocurrency exchanges, Coinbase’s model is somewhat like a traditional financial services company: making money through the role of broker and exchange, and also acting as a part of the “bank.”

From a project PPT drafted in a small apartment in San Francisco in 2012 to being listed on Nasdaq in 2021, the market value of this ten-year-old company has soared to over $110 billion as soon as it went public.

Today, it is not only the “place of faith” for cryptocurrency advocates, but also the “popular fried chicken” that most attracts employees of established factories. Its workforce has nearly tripled in the past year, to nearly 4,000 now. This year, the product, engineering and design departments will continue to absorb more than 2,000 employees.

Compared to Coinbase, undefined knows more about NFTs. With the NFT project in full swing, OpenSea, which was established only 4 years ago, has become a well-known NFT trading platform in the world, controlling at least 95% of the transactions in the NFT market.

OpenSea’s model is very similar to Taobao – everyone can open a store and everyone can list their own NFTs, so more and more celebrities, brands and major companies list their own NFTs. Shawn Yue auctioned the “zombie avatar” on OpenSea and made 100 million in just two minutes, directly blowing the NFT wind out of the circle.

The hottest NFT at the moment is undoubtedly the Boring Ape Yacht Club (BAYC). The blockbuster news in the NFT industry is all related to the Boring Ape. Even a16z replaced the official Twitter avatar with a boring ape NFT.

Many brands have also taken a fancy to the marketing and communication value of Boring Ape. For example, China’s Li Ning, Adidas and other first-line sports brands have cooperated with it.

And the parent company that created this famous “Boring Ape” IP is Yuga Labs, which has always had a high transaction volume in OpenSea.

In March of this year, Yuga Labs obtained the intellectual property rights of the two major NFT projects, CryptoPunks and Meebits, from Larva Labs, and completed the integration of the three largest IPs in the NFT market.

The ambition of Yuga Labs is not only NFT, but more hope to build a universe (universe), and BAYC is the center of the universe, Yuga Labs can become a Web3 lifestyle company.

While the investment circle and entrepreneurs are still enthusiastically discussing the topic of Web3, StepN, who has become famous in China, suddenly went out of the circle because Zhu Xiaohu, a well-known investor in China, bought a pair of virtual shoes on his platform.

On May 27th, StepN officially announced that it would check accounts in mainland China, and even encouraged Chinese users to deal with their assets in the game. This means that mainland users can no longer participate in this “Move to earn” Web3 game.

This StepN, known as “the most popular application of Web3.0”, is a sports platform established in Australia last October. It can “earn US dollars” by “running”, so it is called “walking money printing machine”. Even for this reason, a “running” service has been derived.

StepN generation running, Tuyuan Xianyu App

The model of running to make money makes it a new star in the Web3 world. Since the launch of the platform, StepN’s growth has exceeded many people’s expectations. Currently, it has more than 3 million monthly active users worldwide, with tens of thousands of new users joining every day. Some even compared it to Keep when running laps.

But compared to the Internet migration in the United States, the country is still relatively quiet. At present, there are very few Web 3.0 projects that domestic VCs can take a fancy to. A U.S. dollar fund investor told Wired Insight, “There are few good targets in China, and we mainly focus on overseas companies.”

No matter what era, as long as there are new changes in technology, there is the possibility of a new giant being born, not to mention the Web3 has just begun.

Giants are also working on Web3

The real Web3 era is far from here, but the giants have already met again at this table.

Web3 may be a fake carnival, and Chinese Web2 now leaves a real disappointment – this is the attitude of Zhang Xiaolong, vice president of Tencent and founder of WeChat, on Web3 at the 2021 Tencent Staff Conference six months ago.

But only three months after the speech, Tencent’s attitude reversed 180 degrees, and Tencent appeared in the Web3 field.

Perhaps considering that the game business is Tencent’s main “cash cow”, Tencent’s entry point in Web3 is also the game field, which is carried out through external investment.

In March of this year, Tencent and Singapore’s Temasek led investment and many other capital institutions to complete a new round of financing for Immutable, an Australian NFT game company. This is a game company with Web3.0 technology.

This is Tencent’s first investment in the Web3 field. As a domestic Internet giant, Tencent’s investment trend change also represents a change in the wind. In an interview with 36Kr, a Tencent employee revealed that Tencent has hardly invested in domestic ToC startup projects, and Web3 may bring new possibilities to it.

The origin of Tencent and Immutable is actually quite long. As early as September 2019, Immutable’s $15 million Series A financing was led by Naspers Ventures, an investment company under Naspers, Tencent’s largest shareholder.

Compared with Tencent’s investment action, the layout of ByteDance is not obvious.

As ByteDance’s global weapon, TikTok must be used as a starting point for Web3. In October last year, TikTok launched its first NFT work, TikTok Top Moments, which are six “culturally significant TikTok videos.” The work is a collaboration between six of the most popular creators on the platform and a number of well-known NFT artists.

It is not difficult to find that Byte and Tencent’s layout of Web3 is based on the original business, and they are all concentrated in overseas markets. Ali chose a new path to try Web3 in China.

In July last year, the South China Morning Post, a Hong Kong newspaper under Undefined, launched an NFT platform program called “ARTIFACT”. This project can NFT the factual narrative or real historical assets, and the generated NFT works can be passed through its own NFT platform “ARTIFACT”. issued.

In addition, with reference to foreign NFT products, Ali launched the WhaleTrack NFT issuance platform with the help of “Ant Chain”.

NFT works, Tuyuan Whale Quest App

Emerging and powerful enemies are waiting around, and old Web 2.0 giants such as Twitter and undefined have to come to an end. Compared with these overseas giants, the three domestic Internet giants Ali, Tencent and Byte can only be regarded as cautiously testing the waters.

Twitter is even more advanced on the road to Web3ization. It not only provides an online communication platform for Web 3 entrepreneurial legions, but also is the first to launch NFT products released by Internet giants, so that Twitter’s user avatars can be displayed as NFTs. And the avatars of users with NFTs are displayed as hexagons, which is also considered by the industry to be the first attempt of the Internet giants to transform to Web3.

Soon after, many social platforms such as Google announced that they would join the research and development of Web3 products.

In May 2022, Google Cloud formed its first Web3 team during the month. Professor Lory Kehoe of Trinity University Dublin understands this is that the Web3 project is a priority for Google.

Part of Google’s enthusiasm and determination for Web3 may be due to the excessive loss of Google talent to Web3 companies.

How to retain employees and keep them from migrating to crypto companies has become a frequent topic of discussion between CEO Sundar Pichai and his lieutenants.

In addition, market demand has also stimulated Google to extend a hand to the Web3 field. “Many customers have asked us to add support for Web3 and encryption-related technologies,” explained Google Cloud VP Amit Zavery in an internal email after the new division was established.

Indeed, there is demand for cloud services in the Web3 field. For example, the storage of data and assets requires the use of related services. Therefore, Google is trying to incorporate the new frontier of Web3 into its business landscape.

It cannot be denied that there may be a certain degree of foaming in the signal that the Web 3.0 is about to be released by the outside world. However, the integration of Internet companies and Web3 has become an irreversible development trend, and it is even changing people’s online lifestyle in an imperceptible way.

The influx of participants are all betting on a better tomorrow. They are not afraid of bubbles, but are afraid that they will be slow to enter the market.