Crypto has been working in cycles. Bull markets attract capital and talent into crypto, shoring up projects/companies for the next downturn. As seasons change, public sentiment may change, but innovation continues. To become resilient, establish trust and build truly valuable products, a bear market must exist. It may be painful, but it is a feature and not a bug. Zooming out helps put the current market crush into perspective. Web3 is emerging regardless of the price fluctuations. You're reading this post on a web3 blogging platform (Mirror) that didn't exist in the 2018 crush...
We’re currently in a crypto bear market, and it’s not the first one in crypto’s 13 year history. Crypto prices are down, hype is down, the usual “crypto is dead” mainstream media stories pop up… and then the bull starts. This time, however, is the first time that is happening on the backdrop of a general bear-cycle-going-on-recession in the broader market, which could complicate things. And yet, in spite of recent capitulations, in many regards crypto is the strongest it’s been since inception. Looking at the growth in active crypto developers might be one of the clearest indicators. Most of the developers that come over during summer end up staying through the winter.
The sheer amount of activity and amazing founders who now work in the space make this ‘crypto winter’ feel different. Bear markets are an amazing time to actually build. So, we’re more excited than ever to meet founders with conviction, deepen relationships and knowledge and hopefully back ventures that will help take crypto to the next level as the seasons change.
This feels like a great time to kickstart the Square Peg Web3 blog!
Over the years I developed strong conviction in the incredible potential crypto has to transform digital (data) ownership. That could reshape the way the internet operates (web3) and how humans organize some of their activities. My own crypto journey started in 2014, initially as an investor at Venrock and then as a founder at Props and angel investor. Through that period and since crypto has evolved from frontier, niche tech to what many consider to be the most fundamental area of innovation in tech these days.
My web3 excitement has been matched by some of my colleagues at Square Peg as well. Our team is spending an increasing amount of time in the space, meeting >150 founders, building individual conviction and going deeper into the rabbit hole. This has resulted in our first 3 investments in crypto/web3-centric companies and learnings that we regularly share internally. We want to start sharing them with you too.
One of the mind blowing attributes of crypto is that it instigates a fundamental evolution in business models, go to market paths, network governance structures and the relationships between networks and their users or partners. This opens up new opportunities for disruption across many industries. It also means the creation of a new tech stack. Therefore, the winners in this space come in all shapes and forms, and will continue to be built by founders with diverse skill sets in various industries, globally. At Square Peg we work from offices in 3 continents and see differences in the type of founders we back in each region and the type of companies they build. Crypto is no different in that regard, and we see different notable themes in our geos, with some overlap, for example (not an exhaustive list): Israel excels in deep tech (StarkWare), security (Fireblocks) and other B2B enablement tools. In SouthEast Asia we see the rise of play-to-earn (Axie, Yield Guild Games), effectively solving for decentralized global gig work, as well as successful expansions of fintechs into crypto (Plaung). In Australia we see compelling DeFi protocols and infrastructure plays (Immutable X, Reservoir).
We’ll cover our learnings across these areas and others on Mirror, so you may also get a taste of one of our favorite web3 products while you’re at it. It’s going to be an eventful winter!