Web3 disrupts Web2 business models. Web2 business models are middlemen-type models. Web3 inherently cuts middleman out, reducing friction. Additionally, Web3 enables the instant coordination of human & capital resources on a global basis.

The potential for high returns, which is driven by the early stages of Web3’s innovation S-curve, small market size relative to total addressable market, low regulation, fragmented industries, and increased investment from large corporations and funds.

Improved liquidity, with the ability to exit in 2-5 years and receive tranches of liquidity starting from 24 months.

Regulation, is currently a challenge, but has the potential to bring clarity and validation to Web3 tech, attracting mainstream consumer brand and investment capital.

Web3 start-ups have access to ‘easy’ speculative capital creating more competition for investors to access deals, and quicker investment decisions (typically 10 days after 1 meeting with founders)

Lower standards in Web3 attract low-quality start-ups, such as unproven business models, newer (higher risk) technology, anonymous leadership, limited legal obligations from founders & limited intellectual property rights.

Web3 offers smaller ownership stakes to VCs (<5%). Web3 start-ups prioritize a diverse stakeholder base and being governed by active users (over passive investors)

The pricing of Web3 investments is cyclical and volatile due to an unclear path to profitability

Web3 faces unclear, but imminent, regulation

Web3 requires specialized staff with expertise in token economics, blockchain development, web3 culture, and regulation.

Web3 investments pose more demanding asset custody challenges, such as cold storage and multi-signature key management.

Web3 tech is self-disruptive, a combination of open-source code, no IP rights and fast innovation causes tech to quickly become obsolete.