Is VC a poison for Web3?
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Is VC a poison for Web3?
We need people to strive for Web3 to move toward decentralization and equality, and fight for it.
Navigating Web3 tides with focused insightsWritten by: cantino.eth
Compiled by: TechFlow
NFTs have been seeking funding from VCs.
Apes recently reached a $4 billion valuation, while Doodles and Proof are approaching unicorn valuations.
Thanks to early community support, these projects were initially self-funded.
But what does it mean when projects move beyond the community and turn to venture capitalists for growth?
First, let’s discard the “us versus them” mindset.
We all know: Not all VCs are bad—they help developers achieve product goals.
But we also understand why many view VCs negatively: as a warning against repeating Web2 mistakes.
VCs aren’t perfect. But Web3 is improving this model.
In fact, venture capital itself is a form of decentralization, allowing dozens or hundreds of investors to own stakes in small companies.
Web3 empowers artists and companies to grow, enabling everyone to become a kind of venture capitalist in their own right.
But there’s a key difference.
By collecting tokens, you don’t gain equity in the project.
However, you can still profit—potentially over a shorter time horizon.
Unlike traditional VCs waiting 5–10 years for an exit or IPO, you can exit whenever liquidity allows.
Crucially: Projects do not owe you liquidity.
The good news is that Web3 fundamentally favors decentralization.
From Nouns to independent creators like XCOPY, community-driven funding is thriving. BAYC had nine-figure revenue before accepting any VC investment.
Compared to Web2, we’re moving forward—let’s not discredit this innovation.
Generally speaking, Web3 is open-source—from code to blockchain activity—its openness and interoperability lay the foundation for decentralization.
Compared to Web2, this is a significant improvement.
VCs own little of the code; this technology inherently belongs to the people.
Decentralization also enables new defenses.
Because many projects can be “forked” (their core source code copied), participants can simply shift allegiance to derivatives that better align with their values if the original project betrays them.
Now, let’s discuss the downsides of VC involvement in Web3.
Simply put, 9 out of 10 VC-backed projects fail.
This is a problem—but it’s also part of the solution.
Yes, VC is a category of risk capital—and it has a place within the ecosystem.
Some startups especially require large cash injections to scale, far beyond what they could raise from the community alone.
For example, infrastructure layers like Alchemy or Pinata are well-suited for VC or hybrid funding models—not everything needs to be community-funded.
Now to the root issue: Discord arises when projects initially rally users around speculative promises and then abruptly shift incentives by raising massive amounts of venture capital.
When a blue-chip project takes outside funding, you can be sure its investors expect returns.
- Key performance indicators pre-VC: user sentiment, community engagement, floor price
- Key performance indicators post-VC: revenue, valuation, daily active users
The incentive structure cracks under this shift.
But it’s not all doom and gloom.
After receiving funding, projects will strive to satisfy both collectors and investors—even if they don’t succeed perfectly on both fronts.
In the long run, if the benefits of scaled venture investment materialize and millions of users accumulate, patient collectors stand to gain significantly.
Yes, even if your token’s liquidity suffers, do you still believe the project can become one of the biggest gaming and entertainment companies of our generation?
If so, perhaps the projects that best balance collector and investor returns represent the greatest alpha.
Warning: Some venture firms have raised massive funds, leading them to adopt a spray-and-pray investment strategy.
Startups grow too fast, overpay at inflated prices, and many projects fail due to misaligned incentives.
Skepticism is valid. Venture capital is a competitive industry, and like any industry, it can sometimes get ugly.
But claiming that venture capital has no place in Web3—or that its incentives are fundamentally incompatible with Web3—leaves no room for innovators who need institutional capital to achieve mainstream success.
So, who truly owns Web3?
- Developers;
- Miners;
- Startups;
- Investors;
- Users;
In short: Everyone.
But now more than ever, getting ownership distribution right is critical. We need people committed to pushing Web3 toward decentralization and equality—and fighting for it.
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