Despite the bearish market, investments into startups are still holding strong. According Cointelegraph’s Q3 Venture Capital Report, September saw a 20.6% increment in venture capital (VC) inflows in the crypto industry to $1.64 billion, up from $1.36 billion in the month prior. That being said, the crypto industry is certainly not isolated from the global market downturn, and the third quarter’s net inflows dropped 66% from over $14 billion in Q2 to just under $5 billion in Q3.
Yet VCs play a crucial role for startups, as they are significant in supporting startups across the span of their lifetime, securing fundraising and providing invaluable insight or advice in assisting their startups in overcoming obstacles as they progress along their respective roadmaps. With extensive years of experience at their disposal, some VCs also play a more active role to nurture their selected startups, formulating strategies and spearheading campaigns to help startups take flight. Industry connections and reputation in name are all key assets spur startups to source for promising VC support as well.
To find out more about startups and their journey towards scalability in the Web3.0 space, we spoke with Vance Llewellan, the Startup Ecosystem Lead at Huawei Cloud.
“We are very discerning when it comes to deciding who we work with from a startup perspective,” Vance muses. “We initiate projects with startups to help them collaborate with bigger enterprise customers and innovate within their own business.”
Vance, who is the Start-up Ecosystem Lead for the SPARK program, explains that the program was conceptualised within Huawei Cloud to work with tech-based startups and ensure that they receive financial benefits in the form of cloud credits and VC support to help in their transition process towards developing tangible projects with enterprise customers.
“We intimately work with these startups, provide them with a dedicated working space and world-class facilities,” Vance explains. “Although we are still a fairly small team, we have very quickly become one of the largest startup ecosystems in Asia and are currently present on two continents.”
Having owned a startup himself in the past, Vance is certainly anything but new to the startup scene.
“Having come from a startup background, it can be quite a lonely and treacherous path,” Vance reminisces. “I think we always underestimate what it takes for a startup to become successful, which is why there is such a high failure rate.”
Coinlive's Interview with Vance Llewellan, Startup Ecosystem Lead at Huawei Cloud
Indeed, only 0.05% of Web3.0 startups actually manage to secure VC funding, and despite thousands of Web3.0 projects managing to secure seed funding or completing their initial token offering, 98% of startups tend to fail as a result of an inability to raise further capital and liquidity – both of which are crucial aspects for sustainable scaling.
The bear market, coupled with recurring institutional crashes that have plagued the year, have certainly made VCs and investors much more wary in pumping cash into Web3.0 startups as a whole. Speaking about the effects of the FTX debacle, Vance believes that these crashes have made VCs all the more wary and selective about where they actually decide to entrust their funds to.
“A lot of VCs are being taken to task and questioned over the due diligence that they perform on a startup,” Vance says gravely. “It’s been a bit of a wake-up call for VCs, especially those who have been burnt by Three Arrows Capital, Celsius, FTX, where money had just been thrown at these names with little to no due diligence taken.”
Vance’s sentiment calls to mind the now-infamous scene of FTX’s founder Sam Bankman-Fried playing popular multiplayer online battle arena video game League of Legends during a meeting with investors from Sequoia Capital. As Tim Draper, founder of Draper Fisher Jurvetson puts it: “Investors always get it wrong. They come in when it’s hyped up and everything’s great, and then the VCs all have to compete with each other.”
Building a brand requires vision empowered through multidisciplinary skills such as strategic thinking, marketing, design, writing, creativity, communication and collaboration, Vance tells us.
“Startups need to make sure they present themselves professionally, and that they have a strong partner to help them structure their go-to market strategy, finances, as well as strategic intent.”
Indeed, while VCs may indeed be able to take a brand or existing IP far into the future with their funds and professional guidance, the burden still ultimately rests predominantly upon the shoulders of the project members themselves to truly build a compelling product that has been stress-tested.
“We at SPARK track the performance of startups against the different modules that we present to the cohort, and observe how the teams react to the information we put forward, as well as how they respond to the pivots that are required or recommended by their respective mentors,” Vance says sternly. “In this way, we can provide more data to prospective VCs to make an informed evaluation on the startup.”
In general, the Web3.0 space is one that is largely predicated on groundbreaking and revolutionary ideas, the likes of which have never been seen before in TradFi and the Web2.0 space. Metaverse engineering, AI learning, smart contracts, cryptocurrency, and decentralised autonomous organisations are all hallamarks of Web3.0 For Vance, it is precisely the innovative ideation that startups bring to the table that make them invaluable.
“As a startup in the Web3.0 space, you need to think outside of the box and be agile – you need to be a maverick,” Vance says as we close off the interview.
“These are the ones who challenge the status quo and break down old world constructs. Our goal is to help them remove the harsh learning curve and grow in a sustainable manner for the future that awaits them.”
This is an Op-ed article. The opinions expressed in this article are the author’s own. Readers should take the utmost precaution before making decisions in the crypto market. Coinlive is not responsible or liable for any content, accuracy or quality within the article or for any damage or loss to be caused by and in connection to it.
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