Crypto incubators, accelerators and venture capitalists rise to the challenge of Web3.0 for all investors

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Many will remember the ICO craze of 2017, when crypto startup projects to raise capital exploded from May this year, with Bitcoin hitting all-time highs, rising above $ 15,000 by December. Projects flooded the market in search of capital to mint new coins and promised groundbreaking changes.

The ICO landscape quickly sank into chaotic scenes of indiscriminate buying and selling, often for quick profit, without considering long-term sustainable growth and investor interests. Hype and expensive marketing campaigns often misled investors, many of whom succumbed to greed instead of even cursory due diligence.

While there have been many excellent projects, some of which are still with us today, many have been fraudulent, malicious, or at best misdirected. The SEC announced that it would consider many tokens as securities and would apply the Howie test to coinage projects. This dampened the market considerably and in the end some studies identified more than 80 percent of all ICOs as scams that for many earned the badge of the shitcoins from the ICO boom.

This was not the best day for crypto and the sector has done little to induce legitimate and responsible financial system inclusion among policymakers and regulators, and that sentiment still lingers in the corridors of power today.

This is the main reason why many in my global community have come together to create Global Digital Finance, an industry non-profit organization focused on developing and sharing leading market practices and standards for the crypto and digital asset sectors concentrated.

Many of us have been called to action to show that the crypto and digital assets sector was founded, staffed and led by responsible individuals who could abide by jurisdiction and global laws and make policymakers and regulators more meaningful Wanted to support compliance while asking for patience with the new technologies and business models as the ones evolved.

The big message was: “There are adults in the room”, and there are groundbreaking innovations here that benefit society, let’s not get lost in technical jargon and please be patient.

Characteristic of bursting bubbles, this peak was followed by a slump, commonly known as the “crypto winter”. Those dark days had a silver lining as it turned out to be a time for many to learn from mistakes and rethink the future of crypto.

A wave of groundbreaking crypto-based incubators, accelerators and venture capitalists emerged with the aim of restoring normalcy and rekindling the flame of innovation. In addition to discovering and supporting really promising early stage startups, incubators have significantly expanded the scope for capital formation and accumulation in the blockchain cryptocurrency sector.

The 2021 List of Blockchain Venture Builders, Incubators & Startup Accelerators is pretty comprehensive, and since its arrival this collective has been a catalyst for increasing institutional investments in crypto-based projects that have helped flood the market with record amounts of cash.

Huy Nguyen, CEO of Kardia Ventures, believes that incubators are more than just expertise and experience. They also provide startups with access to a substantial and extensive network of investors, stakeholders and service providers, and provide much-needed capital to ensure that startups have a clear path to success in the early stages. Kardia Ventures has invested tens of millions of dollars in 18 companies, including participation in a $ 8.5 million seed round for DeHorizon and an initial round of $ 2.1 million for Thetan Arena.

A record year for venture investing

Venture capitalists invested $ 26 billion in crypto-based projects in 2021, dwarfing numbers from previous years. The increase includes a $ 10 billion investment in Bullish Global crypto exchange and $ 350 million in funding for NFT gaming company Dapper Labs. Additionally, Paradigm and Andreessen Horowtiz have launched their own crypto mutual funds worth $ 2.5 billion and $ 2.2 billion, respectively, the largest of their kind to date.

Venture capitalists aren’t getting into the crypto industry just for ROI. Coinbase Ventures’ Shan Aggarwal points out that given the blockchain-powered future that Web 3.0 promises, short-term profit is not the most important metric of success. What is really important is adding liquidity to the crypto markets. In other words, managing volatility issues is key to long-term success, and the recent inflow of venture capital goes a long way towards making it run smoother.

Institutional investors are becoming increasingly interested in the crypto market, but they don’t always orient themselves by the principles of decentralization and user-centricity, and some have been at odds with the broader interests of the crypto and digital assets community. This prevalence caught the attention of Cardano founder Charles Hoskinson, who believes institutional investment threatens the performance and community-led nature of the sector.

Hoskinson warns, “They (the institutional investors) will always get their pounds of meat before anyone else.”

The scenario is changing for the better as institutional investors rethink their strategies to meet the needs and demands of the decentralized world of Web3.0. Deciding anything behind closed doors and in secret has been the traditional practice, and nowadays some are trying to ratify investment decisions through community-based voting, as demonstrated during the SushiSwap funding rounds.

Private investors continue to drive acceptance

Private investors will always dominate the transaction volume in cryptocurrencies and have almost single-handedly created the $ 2 trillion crypto market without the governments and the old financial system, which is probably Satoshi’s main goal with Bitcoin. Many institutional investors are accessing the market by getting exposure to funds and listed stocks with a focus on blockchain and cryptocurrency for exposure to the asset class, especially in the west.

High volatility, a persistent characteristic of cryptocurrencies, does not serve the needs of retail investors who typically lack the capital buffer to absorb market fluctuations and who have neither the hedging playbook nor the experience to rely on . Large capital losses pose a significant threat to many retail investors who are confined to far less risk than institutional actors. Volatility is also a big issue for regulators and an important aspect of investor protection policies related to crypto assets.

Recently, retailers in Vietnam, India, Pakistan, and Ukraine have bought cryptocurrencies, increasing the adoption rate to more than 881 percent in 2021. In India, retail investments rose 600 percent from April 2020 to March 2021, rising from $ 900 million to $ 6.6 billion .

Such erratic buying and selling hamper the sector’s progress and create a vicious circle of persistent volatility. Policy makers are advised to provide a greater degree of consistency and clarity regarding the direction of travel and regulatory security of crypto assets in order to better align and consider the interests of retail investors for longer-term market stability.

A crypto market for all investors

The crypto and digital assets sector is on the verge of a paradigm shift with Web3.0, and incubators, accelerators and venture capitalists are ready to face this situation. In addition, onboarding new investors is vital, and many are already addressing these new challenges with relative efficiency.

Creating a safe space for private and institutional investors is one of their main tasks for incubators and accelerators. If policymakers and regulators can match this with regulatory sandboxes like Hester Pearce’s Safe Harbor proposal in the US and the Pan-European Regulatory Sandbox as part of MiCA, the sector will be better placed to serve all investor markets efficiently and effectively .

The opportunity to usher in a new era of innovative collaboration between industry and regulators lies ahead and we are nearing the turning point where policy makers understand the importance and impact of this new and innovative digital financial infrastructure on society.

Platforms like Morningstar Ventures use in-house and outsourced expertise to build investor confidence through rigorous valuation and risk management. Following these principles, Morningstar Ventures has expanded its portfolio to include a wide variety of decentralized finance (DeFi) investments, including tokens such as Elrond, Polkastarter, Humans.ai and Yield Guild, as well as holdings such as NGRAVE, Moralis.io, Unstoppabledomains. com and Ethernity.io. Successful incubators like Morningstar Ventures take into account all of the criteria needed to make informed investment decisions, from earnings models to growth potential.

With ongoing innovations in crypto-based venture capital financing, the scope for secure private investments is greater than ever. Diverse fundraising methods such as Initial Exchange Offerings (IEOs) and Initial DEX Offerings (IDOs) are crucial to further lower the barriers to entry. In addition, today’s launchpads prioritize sustainable growth and implement robust checks and balances to filter out bad actors. For example, DAO Maker offers a lock-in functionality that protects investors while ensuring the innovator’s accountability.

Ultimately, the implementation of the Web3.0 vision will be required by both retail and institutional investors. Institutional investors have the resources to reduce volatility and improve mainstream adoption by adding liquidity to the cryptocurrency markets while retailers maintain the community-led structure of the sector. Both are the key to success. In order to bridge the gap and lure both sides to the table, incubators, accelerators and venture capitalists play an important and crucial role in securing the sustainable future of the crypto and digital asset sector.