Navigating Web3 Startup Landscape with Limited Funds According to Crunchbase data, in the first two quarters of 2023, funding dipped by 78% and 76%, respectively, as compared to the same time period in 2022. In 2023, VCs injected $10.7 billion in crypto startups, a 68% decrease from the $33.3 billion in 2022
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The bull market has shown signs of arrival as the ecosystem looks forward to a market revival after two years. In Web3, bear markets are generally considered the best time to build, so that the products can withstand all adverse conditions and still learn to thrive and scale. However, sentiment plays an important role in crypto, meaning that builders/ consumers are more optimistic about products when the market is up.
New builders will be more encouraged to build something from the scratch amidst the larger optimism so that they can reach an equally enthusiastic lot of consumers. So those who have spent the last two years keeping a close watch on the market dynamics and the token movements might face a tougher time creating something due to the funding shortage. With several projects collapsing and others falling short of their initial hype, investors have tightened their pockets.
According to Crunchbase data, in the first two quarters of 2023, funding dipped by 78% and 76%, respectively, as compared to the same time period in 2022. In 2023, VCs injected $10.7 billion in crypto startups, a 68% decrease from the $33.3 billion in 2022.
LEVERAGING OPEN SOURCE TOOLS AND COMMUNITIES
At the core of building a Web3 startup with limited funds lies the utilization of open-source tools and building communities. Platforms like Ethereum, Polkadot, and Cosmos offer decentralized infrastructure and protocols, although their gas fees are high and not beginner-friendly. Engaging with the open-source community fosters collaboration, learning, and contribution. People with various expertise can come together and if they are truly passionate about building something from scratch, can actually reach into their pockets, pool in funds to help the initiative take off before revenues come in.
Additionally, starting as a DAO right from the start will provide more autonomy to the community where each individual can claim stake on a certain number of tokens in exchange for contributing to the project.
This could be a great start to developing a Minimal Viable Product (MVP) and avoid unnecessary expenses.
CREATING SUSTAINABLE GROWTH STRATEGIES
Scaling a Web3 startup on a shoestring budget requires a shift towards sustainable growth strategies. Rather than relying on costly marketing campaigns, startups should focus on organic growth through community-building and word-of-mouth referrals; engaging with potential users on social media platforms; attending industry events; and organizing meet ups in different cities with interested communities. Exploring grant programs and hackathons tailored for Web3 startups can provide a much-needed lifeline. Creating strategic alliances with existing and well established startups can also amplify resources and overcome limitations. Mentorship from leaders who have built bootstrapped products can be a great way to tap into practical experiences and real time feedback on the industry pulse.
Startups can self-fund or use revenue generated from early adopters to fuel growth. Continuously iterating on the product based on user feedback ensures progress towards the vision while conserving financial resources.
