Web2 or Web3?

"A new pair of venture-capital funds raised by the Silicon Valley investor Katie Haun has broken records, underscoring the interest in crypto-related startups in a nascent sector known as Web3 that says it wants to decentralize and democratize tech platforms.

Ms. Haun, an alumna of the venture firm Andreessen Horowitz, said Tuesday that her firm, Haun Ventures, has raised inaugural funds totaling $1.5 billion to back early-stage Web3 startups. It is the latest in a rush of dedicated Web3 venture funds as Silicon Valley investors embrace the prospect of the next generation of the internet.

Web3 companies are games, marketplaces and other platforms built on blockchain technology and generally involve cryptocurrencies and digital tokens that give users or players opportunities to acquire assets. Many of the companies that have emerged so far in this well-funded but unproven sector involve the buying and selling of digital art, or elaborate games that take place in virtual reality. There hasn't been widespread consumer adoption of such technology, and it isn't clear how regulators and lawmakers will view them. President Biden this month issued an executive order to study digital currencies.

Ms. Haun's fundraising marks the largest among new venture funds with at least one female founder, according to data from PitchBook Data Inc., and is more than double the size of the previous largest inaugural fund raised by a firm with exclusively female founders. Ms. Haun's fundraising also ranks as the second-largest among first-time U.S. funds with a sole general partner who makes the investment decisions at a venture-capital firm, according to PitchBook. It trails MRL Ventures Fund, the venture-capital arm of the pharmaceutical company Merck & Co.

Ms. Haun didn't immediately respond to a request for comment.

In her blog post announcing the funds -- one $500 million and the other $1 billion -- Ms. Haun said cryptocurrency has already created new financial systems that technology companies can build upon and that Web3 companies that emerge over the next decade will be even more expansive in their disruption, transforming transportation, commerce, fashion, sports, music and other industries. Ms. Haun, a former federal prosecutor who came to venture capital after a career of more than a decade at the Justice Department, said these startups will break down "the walled gardens that came before."

Many Web3 proponents lament the control that has been concentrated in big companies and organizations and say the tenets of Web3 will distribute ownership and power more equally. These companies, in theory, allow all users of a platform or app to have an ownership stake, contribute to decision making and have opportunities for financial gain.

There are also cases of fraud and growing concern about how these technologies might exploit people into spending -- and losing -- a lot of money, given the volatility of cryptocurrency, hacking, the lack of regulatory protections and other risks. Some say Web3 is more a product of salesmanship from investors who stand to reap a windfall than it is a transformation of the internet.

The problem with Web3 "is it relies on the greater-fools theory," said Catherine Flick, a researcher in computing and social responsibility at Britain's De Montfort University. "People have got so much money tied up in it that they want to continue the hype as long as they can."" [1]

 

There is also another possibility. The walled gardens of the richest companies in the world, called Apple, Microsoft and others like them, have got so much money tied up in Web2, they do not want to be disrupted as long as possible and will spread the reasoning against Web3 as long as they can.

 

1.  Business News: Crypto Venture Funds Raise $1.5 Billion in Initial Money
Somerville, Heather.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 24 Mar 2022: B.3.