Web3 funding currently works like this: give projects money and expect them to stay afloat. Rather, what Web3 devs need are funding models that offer proper coaching and support to be in the game for the long run.
Many crypto sceptics say that the industry is not going to last for long, but the fact that there are still Web3 project after project popping up, unbothered by market conditions, is a sign of resilience.
As hype rises and dies down, with many assumptions about crypto housing infinite money disappearing, the industry has gone through another round of survival games. As developers stuck around to prove that there still are real, practical use cases to keep building for, money isn’t the only concern at this point. What Web3 funding should add is guidance and support.
Since 2018’s crypto boom, developer engagement has increased 297% across the Web3 ecosystem. Despite market activity indicating not-so-favourable results – with crypto prices taking a 70% hit since last year, the crypto workforce is still growing: with 8% growth in full-time We3 devs each year.
With prices being unpredictable, a steadily-increasing workforce, and investors still eager to be part of this nascent technology, new funding models need to be explored to help Web3 projects succeed and rise up from market downturns.
What’s the issue with Web3 funding?
Web3 funding models often follow the “just throw money at it” approach, where projects receive a lump sum to kickstart operations and are expected to thrive right after that. This logic has also been reinforced by initial coin offerings (ICOs), as they became popular.
However, this ICO-type approach isn’t what’s good for creating a successful Web3 incubator program. Beyond funding, projects require a bit more tender loving care than just an initial investment.
If we can look a bit to Web2 for inspiration, what led Web2 to be so successful was how some companies decided to direct their incubator programs. In the age of Web2, many incubators were more selective, and offered budding teams integrated support systems to help with matters beyond just funding. This coaching approach also helps these teams grow bigger, as industry experts and veterans took on mentoring the next generation of BUIDLers.
This hands-on approach to funding with coaching would be even better if applied to Web3 – a development landscape known for being inherently collaborative.
As more projects nowadays aren’t proprietary, rather on open-source codebases, these sorts of projects require more monetary support due to these projects often being financed by their own users. Such projects also are gateways to working more collaboratively, and can be opportunities to onboard budding developers while encouraging friendly competition and growth in the industry.
Since developing open-source style is more experimental, interconnected, and fast-paced, builders require as much help as they need so they can successfully launch their projects. Not to mention, in an industry where timing can determine a project’s success or failure, throwing money in a project’s treasury isn’t an appropriate solution to any challenge that may arise.
What does a better Web3 funding model look like?
Web3 builders should be offered the right tools that can help them grow with efficiency, and at the right time.
In order to set Web3 projects for success, Web3 funding programs should offer other supporting resources beyond funding, such as:
Web3 is all about security, and the project-building process shouldn’t avoid it either. Even the smallest error in a smart contract code can mean a huge loss in user and/or project funds – and has been the sole reason for many bugs, hacks, and phishes in the past.
What funding programs can offer on the auditing front may include providing professional code auditing: where programs can give guidance on cybersecurity through all stages of project development. Beyond saving a lot of time on the developer front, more money can be saved as well in the process.
Crypto regulation has become a hotter topic, and many projects may struggle to keep up with the news, and how to future-proof their projects in order to survive.
If new projects struggle with navigating legal information and implications of what their products and services can offer, there wouldn’t be much growth in the industry.
Funding programs should set their candidates for success through helping them build to be compliant with regulations, and should provide legal and operational support with partner firms to lawfully do business.
Technical adviser services
Funding programs should provide adviser services for crypto project teams to determine what ecosystem they should build on. Why? It’s because with each ecosystem, there’s a different stack, or toolkit, which is appropriate for each project.
Such changes in technical details can determine the course of a project’s development, and funding programs must be equipped to provide advice in order to make crypto projects the best version they can be, including but not limited to frameworks, collaboration tools, and functionalities.
Some projects may need to focus more on compatibility and interoperability, whereas other projects may need to focus on privacy enhancements. Funding programs should be prepared to continually advise projects on this front, and work with them to safely and efficiently build.
All Web3 projects are reliant on the existing infrastructure that they’re built on, from scaling solutions, blockchains, and more.
Funding programs need to help projects with hosting their infrastructures, and to increase their project’s connectivity to expand their services. Some projects may need to put in extra cash to host their front ends on Web2 service providers, and may need to link with existing fiat on-ramps and payments services.
Beyond that, funding programs also need to provide support in connecting projects with key partners, and networking efforts to increase the spirit of collaboration in the industry.
Where does Web3 funding go from here?
While funding programs shouldn’t limit themselves to including these aspects in incubating Web3 projects, success for Web3 builders and projects can also exist in different ways.
Beyond those categories, marketing, community support, product management, and strategy can also be integral to a project’s success.
Most of all, funding programs should be prepared to ensure that a project can depend on the leverage that the program gives them. Funding programs should be equipped with industry knowledge, and be well-connected enough to give support to budding projects in areas beyond networking and technical expertise.
If a more holistic approach to funding is taken, we may increase in success for the whole crypto ecosystem.