Aleph Zero Blog

VCs in Web3. Podcast Key Takeaways. 

Oct 7, 2023

This episode of the Aleph Zero Podcast is a meeting with Aleph Zero’s Ecosystem Investment Manager, Piotr Saczuk, who will give us an insider’s view into how venture capital companies operate and what they seek in Web3.

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Too Long; Didn’t Listen 

  • Venture capitalism requires lots of work around diligence, research, and an advanced understanding of the market. 
  • It is more than throwing money at the wall hoping for a project to make a return. 
  • Most VCs don’t own their own funds; they invest capital raised from other investors. 
  • Contrary to popular belief, Piotr Saczuk argues that the bear market is not the best time for venture capitalist entities to invest. 
  • We are still early in Web3 adoption, and we still do not know what vertical, use case, or project will still be in use in 5 years or drive the whole space forawrd. VCs keep searching for projects with the potential to shape the industry.
  • Many Web3 products can gain revenue not through their tokens, but through providing software solutions for Web2 companies interested in blockchain technology. These partnerships rarely benefit the token price. 
  • The EFP has currently invested in 38 projects. As of today, four use cases are operational on the Mainnet, while many projects plan to launch on the Mainnet in Q4 of 2023 or Q1 of 2024. 
  • Piotr Saczuk researches the most promising projects that wish to join the EFP and helps them later on by connecting them to external financing. 
  • Besides providing funds, VCs offer mentorship and connections to parties that may be interested in supporting the development of the project. 
  • Piotr Saczuk also leads the Lightnode Podcast, further exploring his relationship with Web3 investors and builders. His podcast now becomes part of the Aleph Zero Podcast with episodes featured in the main publishing cycle. We highly encourage all of you to check out Piotr’s work!  

Venture Capital Is Not About “Spray and Pray” 

There are many myths circulating about the role and work done by venture capitalists. Many observers assume that VCs use a “spray and pray” approach that prioritizes luck over skill and research. This is simply not the case, as explained by Piotr Saczuk, Aleph Zero’s Ecosystem Investments Manager. In his own work in the VC field, Piotr has observed that the role of an investor is to invest in a wide range of diversified projects with the caveat that each investment is well-researched and has solid fundamentals before any funds trade hands. 

This is especially important when we take into consideration that most VC funds don’t own all of their financial resources. In many cases they simply manage the funds of other investors. This adds another layer of responsibility. 

Piotr Saczuk’s role in the EFP is to research projects and assist in the decision-making process regarding which teams will get to benefit from the help the Aleph Zero grant program offers. Currently, 38 projects are building on the Aleph Zero network, with four teams already having deployed their products on the Mainnet. The EFP offers mentorship, marketing assistance and helps connect budding projects with new investors. 

Building In the Bear Market

Another myth Piotr Saczuk does away with during the course of the episode is the belief that the bear market is the ideal time for building. This is simply not true, due to the fact that VCs also suffer from smaller amounts of liquidity that they can dedicate for risky investments. This leads us to another challenge when investing in the Web3 space; namely we do not know what verticals will be still be used in 5 years in this highly evolving space. This results in a high risk-high reward market. It also means that many crypto projects that currently offer tokens do not treat tokens as their primary form of income as adoption and use of the tokens is relatively low and tokens are primarily the object of speculation. This results in a market where most crypto companies main source of income comes from providing businesses with software solutions. 

Decentralization in Web3

One interesting point of view shared by Piotr Saczuk involved his thoughts on the possibility for decentralizing Web3. He notes that despite the incredible efforts conducted by crypto companies to decentralize they are still dependent on several elements of online infrastructure that makes it difficult to claim full decentralization. One of these elements is the dependence of many blockchains on AWS. 

Piotr also highlighted the influence of crypto-celebrities on the governance of blockchains, mentioning among others the incredible sway Vitalik Buterin has on the directions taken by the Ethereum network. 

The Lightnode Podcast powered by Aleph Zero

Piotr Saczuk is also the host of his own podcast series dubbed the Lightnode Podcast which explores crypto and Web3 from the perspective of VC investors and builders. We highly encourage all of our listeners and readers to check out the channel for insightful takes on what is happening in the Web3 space. 

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EP. 14 VCs and their Role in Web3 Startup Growth

In this episode of the Aleph Zero Podcast, we meet with Piotr Saczuk, Aleph Zero's Ecosystem Investments Manager, who will share his insights into the world and the role of venture capital in stimulating the crypto space and the challenges this crucial building block of the Web3 space faces.