VCs come and go, but launchpads will remain a fundamental part of web3

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When starting a business, a great idea is worthless if no one is willing or able to invest the money to make it happen. In the high-tech world where creativity and competition are relentlessly shaping our future through innovation, venture capital and private equity firms are the oxygen of this fast-paced industry.

While a good idea can get you in the door, securing seed funding requires demonstrating skilled leadership, a reasonable product-market fit, and a concise business strategy. However, fundraising in “traditional” technology is fairly structured and predictable, and lends itself more to a patient, long-term approach.

On the other hand, crypto and web3 projects view and conduct fundraising differently. Historically, some crypto and blockchain projects have attracted traditional Silicon Valley VCs like Andreessen Horowitz and Sequoia Capital to invest directly in exchange for stock or tokens. Many of these top VC firms have established subsidiary funds specifically focused on promising crypto and blockchain projects.

However, VC investment tends to rise and fall in relation to Bitcoin (BTC) and the broader crypto market. For example, VC investment in crypto reached an all-time high of almost $12 billion in Q1 2022, following Bitcoin’s previous record price of $69,000 in November 2021. In fact, total VC funds raised in 2023 have yet to outpace Q1 2022 as the falling market sent VCs fleeing.

The crypto bear market, defined by stock market crashes, hacks, and scams, coincided with the meteoric rise of AI, which has diverted VC attention away from web3 developments, even as the sector matures and begins to gain more traction from traditional institutions.

The blockchain sector has been largely open to VC investment, despite its rigid centralized operations and reluctance to invest during volatile times. Due to crypto’s inherent volatility, inconsistent VC participation, lessons learned from the dark ICO period in 2017, and the hyper-competitive nature of the sector, IDO platforms have emerged as an alternative funding route for early-stage projects.

During the previous bull run, launchpads became popular because they provided a decentralized outlet for crypto communities to access a wide variety of projects and allowed them to decide which ones were worth investing in. Driven by retail investors and growing crypto communities, launchpads like DAO Maker and Polkastarter have provided valuable resources to projects because they reflect the values ​​of the industry while providing tools for projects and investors, including institutional players.

While the industry has weathered tough market conditions, causing token prices to drop and projects to close, IDO platforms have evolved alongside crypto. Multi-chain launch platforms like ChainGPT and Seedify are now becoming the norm, allowing more projects to participate.

Since regulatory scrutiny took the industry by surprise, many launchpads have taken significant steps to ensure they comply with local laws, including investor protection processes. Launchpads are also going above and beyond, providing a platform to help projects sell tokens. They are taking a more active role with the projects they participate in, similar to the incubators and accelerators common in mainstream tech.

For example, Gems, a startup launch platform, connects projects with its dedicated network of influential investors for post-launch support to accelerate growth. The platform has 4,000 investment “Leaders” who provide exclusive access to highly vetted projects, while also enabling a growing community of users to invest in high-potential startups. By carefully balancing the needs of investors and projects, Gems has raised a total of $198 million across its first three project launches.

Crypto developments are happening rapidly and are reshaping the industry before our eyes. Financing avenues in this dynamic sector will likely continue to evolve as the industry matures, adds more users, and further penetrates traditional finance. Despite this, IDO launch platforms will continue to be an invaluable infrastructure component that fosters communities and facilitates growth while adopting innovative approaches to serve the industry.