Blockchain technology powering the Web3 ecosystem is capturing widespread attention and also drawing interest from VCs. However, certain key points are fueling the interest of VCs in blockchain-based solutions. While some of these key points of interest could differ from firm to firm, there are also common interests.
Tracy Trachsler, the Managing Director of CV Labs, recently shared insights at the Cardano Summit 2023 on the Web3 ecosystem from a venture capitalist’s (VC) perspective. She highlighted three pillars that make blockchain an interesting area for VCs while shedding light on CV Labs as a VC and its values and activities.
The Web3 ecosystem has emerged as a captivating field, attracting attention from both the masses and venture capital firms. Venture capitalists have shown increasing interest in blockchain-based solutions, driven by several key factors. Although the specific points of interest may vary between firms, there are also shared interests.
During the Cardano Summit 2023, Tracy Trachsler, the Managing Director of CV Labs, provided valuable insights into the Web3 ecosystem from a venture capitalist’s perspective. She emphasized three fundamental pillars that make blockchain an intriguing realm for venture capitalists, while also shedding light on CV Labs as a venture capital firm, its values, and its activities.
Highlighting these three pillars, Tracy identified blockchain as the cornerstone of web3. She mentioned that blockchain acts as a catalyst for various technological megatrends, including artificial intelligence (AI), among others. According to Tracy, “It’s a catalyst technology for every other major Tech Mega-Trend.”
Secondly, as megatrends rely on reliable data, blockchain becomes an integral component fueling these megatrends, she mentioned. Finally, the idea that the underlying ethos of blockchain aligns closely with social megatrends is a point of interest, she emphasized, citing the decentralized and transparent features of the blockchain. Based on this idea, the blockchain has the potential to address societal challenges related to managing public data, identities, and access to information, she explained.
Analysis of VC Statistics and CV Labs’ Focus
Tracy provided an analysis of the current state of venture capital, particularly within the blockchain space. Global VC deal flow has experienced a 50% decrease, with blockchain VC being down 62% in the past 12 months. The deal size has also shrunk, indicating a challenging fundraising environment.
However, Tracy highlighted that despite the discouraging appearance, the underlying developer activity in the blockchain space has increased. This is a positive sign for the industry’s long-term health, suggesting that, despite market fluctuations, builders are actively developing applications.
Notably, CV Labs’ focus over the last 12 months involved 10 deals, seven of which were early-stage investments from their startup accelerator. The use cases covered by these startups were diverse, reflecting the broad application of blockchain technology. Noteworthy is CV Labs’ enthusiasm for Africa, where they see significant opportunities beyond traditional banking, including data ownership, identity solutions, and generally impact-driven solutions.
Furthermore, Tracy also mentioned blockchain projects’ alignment with the United Nations Sustainable Development Goals (UN SDGs). “About 80% of the projects that we’ve invested in coming out of Africa have a sort of UN SDG component,” Tracy said. Additionally, globally, over 50% of the projects supported by CV Labs exhibit a similar alignment.