The new wave of startups is changing the landscape of the internet. As emerging technologies like blockchain are making their way into the mainstream, Web3 startups are becoming the future of the decentralized internet. Web3 is the next generation of the World Wide Web. It is characterized by its decentralized nature, using peer-to-peer networks and smart contracts that run on top of blockchain technology. As with any other startup, raising funds and keeping up with the competition is vital for Web3 startups. This article will discuss the concept of Web3 and its impact on funding, as well as list down the top seed-funded Web3 startups worldwide.
Web3 and seed funding
From the early days of the web to now, the evolution of the internet has been connected to exponential growth. In the same way that blockchain technology is disrupting the internet, Web3 technology is also changing the ecosystem. Web3 technologies have managed to solve inherent problems in the web, such as security, privacy, scalability, and performance. With this in mind, Web3 startups are becoming a vital part of the decentralization movement.
While seed funding refers to early-stage funding, wherein startups are allowed to get started and gain traction. Seed funding for web3 startups is the same, and hence, investors are always on the lookout for the next big thing i.e. Web3. Probably you might be wondering what web3 startups are, how does seed funding work for Web3, and why is it important? Well, the following section will outline the basics of Web3 startups and seed funding.
Before diving deeper into seed funding, it is important to understand what Web3 is and its workings. Web3 is defined as the next-generation internet that is completely decentralized. The decentralized nature of Web3 makes it a peer-to-peer network and more secure.
Compared to the old-generation internet, where users rely on an intermediary or a centralized party to access content, users in Web3 have complete control. All data is stored on the chain and can be accessed by anyone at any time. Typically, cryptocurrency tokens are the key components of Web3, and through their utilization, users can gain access to a certain set of services or products. As a result, Web3 has become the foundation of the decentralized internet.
What are Web3 startups?
Now that you have a general understanding of Web3, let’s move on to what Web3 startups are. Essentially, a startup that is a part of the Web3 ecosystem is known as a Web3 startup. In today’s business world, startups have become the crux of the global economy. Web3 startups are at the forefront of the next internet revolution, and with the widespread adoption of blockchain technology, these startups will likely become a primary use case for blockchain technology.
Decentralized data security extends to financial payments and transactions, improving accessibility and blockchain platform transparency and the elimination of middlemen. Therefore, Web3 startups are gradually becoming a vital part of our digital world.
How does Web3 work in a startup?
The key components of a Web3 startup are decentralized applications and services. The decentralized nature of Web3 has a lot to do with its application, and as a result, these applications work with decentralized protocols and smart contracts. These protocols are more secure as they eliminate the need for intermediaries and third parties. Web3 typically uses decentralized infrastructure and peer-to-peer connections to deliver users more freedom and control over content and data. The blockchain-based decentralized environment enables faster and more cost-efficient transactions, making the process seamless and efficient.
Seed funding in Web3
In the current financial environment, the need for funding is paramount to startups. With increasing competition and a tough business environment, startups need capital to sustain, develop, grow, and evolve. Similar to any other startup, Web3 startups require funding to facilitate the process of building and developing a business. Seed funding is the initial phase in the financing of any startup, wherein startups pitch to investors to get the necessary funds required to start and grow their businesses. Now that you have understood what a Web3 startup is and its relevance to the whole ecosystem, it is time we understand why you would need seed funding and how seed funding works.
Increasing Web3 popularity among investors
Investors look for unique, innovative, and trending startups, that typically are driven by the latest technologies. Gone are the days when a regular business model with a common business plan was sufficient to receive funding from investors. Now, it is the pace at which things are changing; startups need to adapt and evolve to survive the competition. They need to be dynamic and innovative, keeping up with the latest trends in technology. With the emergence of Web3 and blockchain technology, investors are finding potential in these startups.
As per reports, in the year 2022, Web3 startups have raised more than $1 billion in funding out of 43 deals. Even though the current level of funding is small in comparison to other technology platforms, the potential is huge and there is certainly no doubt that Web3 startups are the future. As a result, the buzz of Web3 among investors is increasing and hence, it is only a matter of time before Web3 startups become an integral part of the ecosystem.
Understand seed funding
Seed funding refers to the initial round of funding provided to a startup by investors. Depending on the stage of the startup, there are various levels and types of seed funding which include pre-seed funding, series A, B, C and so on. These early investments in startups are typically made by angel investors, venture capitalists, or other private investors. The purpose of seed funding is to make sure that the startup has enough initial capital to finance its operations and development.
Why is seed funding important for your Web3 startup?
Seed funding is an essential element of the development of a startup. It is considered to be the early stage of funding which helps from building the foundation of a startup to growth and expansion. Here are a few reasons why seed funding is important for your Web3 startup:
- Web3 is in its nascent stage, and it requires funding to facilitate the process of building a strong foundation. Likewise, funds are essential in terms of managing the entire infrastructure, functioning of core modules and getting a foothold in the market.
- The trend of Web3 is increasing and so is the number of startups that are functioning in this field. Since there is great competition prevalent in Web3, blockchain startups require solid funding to gain an edge over other startups.
- Behind every great startup, there is a strong team. Especially when it comes to dealing in the Web3 space, team formation is imperative to sustain the processes. The funding is essential to scale up the team and build up a strong base.
- Web3 is still in its infancy, and it faces a lot of skepticism from within the community. Seed funding validates your project, which gives you a boost from the side of investors and typically acts as a proof of concept.
- Once you are through with your seed funding, it opens up opportunities for additional rounds of financing. This enables you to scale up faster and expand to other verticals, thus becoming an integral part of the ecosystem.
How to raise seed funding for web3 startup
Raising seed funding in an organized manner is key to success. It involves a lot of work and planning, which needs to be done in the right order. So, now that you know how important seed funding is for a Web3 startup and why it is essential, it’s time to look at how to raise seed funding for your startup. Given below are some of how you can raise seed funding for your Web3 startup.
Sources of seed funding for Web3 startups
Following are the top 4 seed funding sources for Web3 startups:
- Traditional entities – Since the inception of Web3 and blockchain technology, there has been a noticeable change in the financial environment. Both private and public sector organizations are increasing their investments in Web3 startups. As a result, established firms are now looking at blockchain technology as a means of capitalizing on current opportunities. The Unicef Venture Fund, for instance, provided equity-free contributions of up to $100,000 to enterprises with the potential to advance humanity.
- Entities within the web3 industry – There are various grants from within the Web3 industry from established entities, which is another good source of seed funding for Web3 startups. It is essential to have a good network and industry contacts, as it enables you to identify various opportunities in the form of grants. Polkadot Web3 Foundation, NEAR protocol grants program, and Harmony Ecosystem Fund are a few good examples of grants from within the Web3 industry. Thus, by engaging in community building, driving adoption, and cultivating credibility, you are more likely to get more funding.
- Accelerators and incubators – Generally, accelerators and incubators are known to give early-stage funding to startups during the initial stages along with other benefits such as mentorship, networking, training and so on. Web3 startups can look for accelerators and incubators that are experts in guiding and shaping the development of innovative Web3 startups. For example, the leading incubator, Y Combinator alumni group Orange DAO supports early-stage Web3 firms, and Tachyon, for instance, is a startup accelerator for early-stage blockchain and Web 3.0 startups.
- Crowdfunding – Crowdfunding is the fundraising approach to raise money from individuals who give small contributions to the startup. Crowdfunding is not a new concept. However, it operates differently. Especially in the world of Web3, when projects are linked with blockchain technology. For instance, Juicebox, a “decentralized Kickstarter” is a well-known platform supported by open-source Ethereum smart contracts. By enabling Decentralized Autonomous Organizations (DAO) to monitor and vote for the funding of projects collectively, however, raising funds in small amounts might not fulfil your vision of scaling up your startup.
Top seed-funded web3 startups
|Yuga Labs||Blockchain, Cryptocurrency, Digital Media|
|Binance.US||Cryptocurrency, Financial Services, Internet|
|Trust Machines||Bitcoin, Blockchain|
|Zora||Blockchain, Cryptocurrency, FinTech|
|Fractal||Cryptocurrency, Marketplace, Virtual Reality|
|Iskra||Blockchain, Gaming, Software, Virtual Reality|
|Aligned||Blockchain, Finance, Software|
|FlyCoin||Cryptocurrency, Loyalty Programs, Travel|
|Espresso Systems||Blockchain, Cyber Security, Information Technology|
|Ceras Ventures||Blockchain, Cryptocurrency, Venture Capital|
|Sogur||Cryptocurrency, Digital Signage, Financial Services|
|Entropy||Blockchain, Cryptocurrency, Finance, FinTech|
|Fortress Blockchain Technologies||Blockchain, FinTech|
|Colony Lab||Blockchain, Cryptocurrency|
|UFIN||Blockchain, FinTech, Information Technology|
|CreatorDAO||Cryptocurrency, Financial Services, FinTech|
|Ponto||Cryptocurrency, Financial Services, FinTech|
|Structure||Cryptocurrency, Finance, Financial Services|
|Nifty Island||Blockchain, Cryptocurrency, Gaming|
|Provenance Blockchain||Blockchain, Cryptocurrency, FinTech|
|Lino||Blockchain, Content Creators, Video|
|Ethernal Labs||3D Technology, Blockchain, Ethereum|
|Context||Blockchain, Finance, Financial Services|
|Treehouse Finance||Analytics, Cryptocurrency, Financial Services|
|Thetanuts Finance||Blockchain, Cryptocurrency, Financial Services, FinTech|
|GlobeDX||Blockchain, Financial Services, FinTech|
|Eden Network||Blockchain, Financial Services|
|ArDrive||Blockchain, Cloud Data Services, Cloud Security|
|Conduit||Cryptocurrency, Developer APIs, Financial Services|
|XREX Inc.||Bitcoin, Cryptocurrency, Financial Services|
|Azra Games||Blockchain, Cryptocurrency, Gaming, Video Games|
|Proof of Learn||Blockchain, Cryptocurrency, EdTech|
|Credmark||Blockchain, Cryptocurrency, Financial Services|
|iSunOne||Banking, Blockchain, Cryptocurrency, Financial Exchanges|
|Pinnacle Crypto Labs||Cryptocurrency|
|Soba||Cryptocurrency, Gaming, Online Games, Social Media|
|Spice AI||Artificial Intelligence, Blockchain, Cloud Data Services|
|Dfns||Blockchain, Cryptocurrency, Cyber Security|
|Revolving Games||Blockchain, Gamification, Gaming|
|Molecule||Blockchain, Health Care, Life Science|
|Gameplay Galaxy||Blockchain, Gaming|
|COBINHOOD||Computer, Cryptocurrency, Finance|
|Slide||Apps, Blockchain, Enterprise Software|
|Cion Digital||Blockchain, Cryptocurrency, Financial Services|
|EthSign||Blockchain, Cryptocurrency, E-Signature, Enterprise Applications|
|LootRush||Blockchain, Cryptocurrency, Information Technology|
|Tally Labs||Blockchain, Software|
|IQ Labs||Blockchain, Cryptocurrency|
|Digital Entertainment Asset||Blockchain, Cryptocurrency|
|Optic||Blockchain, Information Technology|
|Redefine-crypto||Blockchain, Cryptocurrency, Ethereum|
|Omnitude||Blockchain, Information Technology|
|Satellite IM||Blockchain, Software|
|Haruko||Blockchain, Cryptocurrency, Financial Services, FinTech|
|Polychain||Bitcoin, Cryptocurrency, Hedge Funds, Venture Capital|
|POAP||Blockchain, Cryptocurrency, Software|
|MBD Financials||Blockchain, Cryptocurrency, Information Technology|
|Streetbeat||Analytics, Big Data, Cryptocurrency, FinTech, Trading Platform|
|Space Runners||3D Technology, Blockchain, Consulting, Fashion, Sports|
|Unblocked||Blockchain, Internet, Music|
|ICRYPEX||Cryptocurrency, Financial Exchanges, Financial Services|
|Telcoin||Banking, Cryptocurrency, Financial Services|
|TravelX||Blockchain, Infrastructure, Internet, Travel|
|Apeiron||Blockchain, Gaming, Online Games|
|SZNS||Bitcoin, Cryptocurrency, Ethereum|
|StarryNift||Art, Auctions, Cryptocurrency, Digital Entertainment, Gaming|
|MachineFi Lab||Blockchain, Internet of Things, Web Design|
|Galaxy Blitz||Blockchain, Ethereum, Gaming|
|The Luxury||Cryptocurrency, Digital Entertainment, Tourism|
|Angelic||Blockchain, Gaming, Video Games|
|MixMarvel||Blockchain, Online Games|
|Dioreum||Blockchain, Data Integration, Operating Systems|
|Try Your Best||Blockchain, Cryptocurrency|
|Cybirb||Artificial Intelligence, B2B, Blockchain, Cryptocurrency|
|Merge||Banking, Bitcoin, Cryptocurrency, FinTech, Payments|
|Delta One||Bitcoin, Cryptocurrency|
|Rocketplace||Cryptocurrency, Financial Services, FinTech|
|DSCVR||Blockchain, Cryptocurrency, Social Media, Social Network|
|CryptoSlam||Blockchain, Ethereum, Financial Services|
|Lootex||Blockchain, Cryptocurrency, Trading Platform, Virtual Currency|
|InfiniGods||Blockchain, Cryptocurrency, Gaming, Online Games, PC Games|
|Elixxir||Blockchain, Developer Platform, Messaging, Payments|
|zkLink||Blockchain, Cryptocurrency, Financial Services|
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To secure seed funding for your Web3 startup, pitching alone is not enough. You need to prove and support your pitch with the necessary financial data and statistics. In this regard, you may need a valuation report to give a fair representation to investors of your business model, which will help you in securing seed funding. So, if you are looking out for a valuation firm that can measure the value of your Web3 startup, then Eqvista is the right choice. With our startup valuation calculator, Eqvista allows you to measure the worth of your startup within minutes. The software is designed to give you a fair assessment of the value by analyzing various data points. Visit Eqvista and get in touch with us today!