Madrona has all the time been targeted on bold entrepreneurs aggressively pushing their industries ahead. All through the course of our historical past, we have now seen and backed new tech options in nascent classes – from on-prem to cloud to SaaS to the emergence of clever purposes – which have led to model new classes and big markets. With that backdrop, we see large prospects on the earth of Web3, and we’re excited to again change-making Web3 founders.
Madrona is funding areas throughout each layer of Web3, however we’re most actively enthusiastic about wallets as a brand new type of id, overlaps between NFTs and gaming, new cost rails, and Ethereum scaling options leveraging zero-knowledge proofs.
Initially led by enthusiasm for cryptocurrencies like Bitcoin and Ethereum, the Web3 ecosystem is quickly increasing as a brand new computational paradigm. Corporations which might be unafraid to rethink long-held beliefs and customers who’re wanting to work together with the web in new methods at the moment are main the cost. The emergence during the last a number of years of decentralized finance (DeFi), decentralized autonomous organizations (DAOs), and non-fungible tokens (NFTs) spotlight the facility of revolutionary expertise intersecting with buyer enthusiasm.
We’ve got had a powerful opinion for the previous a number of years that blockchain expertise and distributed structure will probably be a serious affect on the way forward for the web. Whereas we don’t assume Web3 will change Web2, we’re seeing one other layer of the web emerge constructed on a Web3 tech stack. Our enthusiasm for this market has not modified and is barely rising stronger as Web3 positive factors steam. Blockchain-related applied sciences and infrastructure are essential to constructing a brand new world of purposes and experiences. Madrona is funding areas throughout each layer of Web3, however we’re most actively enthusiastic about wallets as a brand new type of id, overlaps between NFTs and gaming, new cost rails, and Ethereum scaling options leveraging zero-knowledge proofs.
Madrona has 5 Web3 or crypto investments in our portfolio. Over the previous yr, we’ve targeted on partnering with Web3 entrepreneurs who’re constructing new Web3 infrastructure and purposes uniquely leveraging blockchain expertise. A lot of our investments are nonetheless in stealth or are incubating with Madrona Enterprise Labs. These firms fall into three broad areas in Web3 that we’re enthusiastic about: onramps that can deliver the following 100 million customers into Web3, software analytics, and funds. We see large untapped potential because of an inflow of high expertise pushed to construct the following model of the web, new client behaviors round the usage of NFTs, DeFi, and video games, and the emergence of infrastructure to allow frictionless use of Web3 purposes.
Why Madrona is investing in Web3
The door is open for Web3. Regardless of token volatility, there was elevated client engagement and an inflow of expertise constructing Web3 expertise over the previous two years. Mainstream crypto adoption has exploded, providing extra avenues for customers to expertise Web3. Greater than 81 million individuals maintain non-custodial wallets, for instance. And NFT marketplaces are taking off – OpenSea has greater than 1 million month-to-month energetic customers. Different gaming, ticketing, and membership firms are serving as onramps and using NFTs as ledgers and proof of possession.
Once we take a look at any business, our main focus is on firms creating killer buyer use circumstances and fixing actual ache factors. For Web3, the worth for customers is evolving, however it’s rooted in structure that enables for “trustless transactions,” which means transactions with no intermediary that open the door for peer-to-peer interactions. Trustless transactions allow new methods for customers to personal their knowledge, and as a agency, we’re obsessed with partnering with founders unlocking new customer-friendly interactions.
Amid all the thrill, blockchains nonetheless want a lot enchancment. Blockchain expertise brings decentralization to customers however at a steep worth: transactions are costly, gradual, and irreversible. In some circumstances, these are options, however in different circumstances, the core structure solely serves to extend buyer ache factors. We see this as a serious alternative for brand new gamers. Like different rising applied sciences, there is a chance to leverage what’s new and construct the lacking items.
At Madrona, it doesn’t matter whether or not you’re a Web3 firm, an clever software, or a market, we put money into the crew and the imaginative and prescient of a undertaking. We take a long-term strategy and don’t search for fast short-term returns on our investments.
Why Web3 entrepreneurs ought to companion with Madrona
As early buyers in Taxbit, Sila, RecRoom, and others, we’re deep within the client, fintech, and infrastructure layers of Web3. However regardless of the business, Madrona companions with firms for the long term. Many within the Web3 world are skeptical of enterprise investing. In spite of everything, Ethereum and Bitcoin had been each constructed with out enterprise capital. They launched tokens and successfully raised funds from their very own consumer neighborhood. However there are a number of advantages for entrepreneurs to companion with enterprise capitalists, particularly Madrona, when launching and scaling their firm.
At Madrona, it doesn’t matter whether or not you’re a Web3 firm, an clever software, or a market, we put money into the crew and the imaginative and prescient of a undertaking. We take a long-term strategy and don’t search for fast short-term returns on our investments – we are dedicated to partnering early with groups to construct lasting and impactful companies. We consider profitable companies are constructed over time with the steering and backing of buyers that roll up their sleeves and work intently with entrepreneurs to offer a useful perspective, a community, and entry to sources corresponding to hiring, communications and back-office infrastructure. Our technique is effectively suited to Web3. With a lot volatility in early initiatives – from sudden drops in token worth to money limitations, to even issues like a world pandemic – Web3 groups are greatest suited to working with buyers who’re deeply dedicated to supporting the corporate all through its complete journey.
The Madrona crew has loved participating with the Web3 ecosystem in individual because the pandemic has died down. We attended NFT NYC, ETHDenver, and ETHPortland, and not too long ago Madrona Enterprise Labs hosted a Web3 hackathon, Launchable. Please attain out if you need to be included in future Web3 meetups, hackathons, and builder occasions. In case you’re constructing a Web3 firm for the long term, all of us at Madrona are excited to attach and study extra!