The evolution of a global web 3.0 technology startup ecosystem
Technology startups have always needed ecosystems to develop and grow. At launch they are very fragile and need all the support they can get, whether from commercial or Government sources. However, ecosystems have always evolved slowly. This is primarily because their success has been intrinsically linked to specific geographic locations and the infrastructure provided; whether it be universities, venture capital or corporate research facilities. The net effect of web 2.0 ecosystems has been to greatly polarise economic activity to a few elitist locations whilst simultaneously stifling entrepreneurship across much of the globe. It is interesting to examine how this might change in a web 3.0 world.
Silicon Valley was the first, and for a while only, technology ecosystem and benefited from the proximity of Stanford Campus, VCs in Sand Hill Road and major technology companies such as Hewlett Packard and Intel. I won’t go into the whole history of The Valley but the defining characteristic was the desire for venture capital to be close to the startups they supported. Even 5 years ago VCs were still saying that they only invested in startups less that 1 hours drive from their office. This worked to The Valley’s favour as founders flocked in but was of little help in spreading global entrepreneurship.
Other cities saw the success of Silicon Valley and copied the same model. Firstly, it was a small number of major US cities followed by Tel Aviv, London, Berlin, Stockholm, Paris and others. These ecosystems each had their own universities, venture capital and large companies. They were often focused on industry sectors where they had a particular strength, such as fintech in London. Initially VCs were reluctant to invest outside their region but this very slowly opened up in the last couple of years. During lockdown, the use of video conferencing meant that VCs could review startups from other geographies but there was still a huge concentration of resources in a limited number of places.
Web 3.0 is already having an impact on how ecosystems work. Firstly, resources are far more broadly spread across the globe. This is true of both the development community, sources of capital, academia and other experts. Again Covid-19 lockdown accelerated the move to virtual working for those that could, and this particularly meant the elite technologists driving the web 3.0 economy. This time round the money has had to follow the investment opportunities, particularly with competition for deals between VC and crypto treasuries. There is also a more complex mesh of collaborating entities to consider in a Web 3.0 ecosystem. There will still be the usual universities, VCs and corporates but also a host of crypto participants. This is important because of the decentralised nature of the sector.
The ecosystem support structures for web 3.0 are not fully defined yet. The probability is that it will be more collaborative, decentralised, democratised and faster to respond. Interactions are less formal and more fluid. It will be a hugely positive move for global entrepreneurship with much greater inclusion for diverse groups. Ironically, much of this is happening in advance of main-stream use-case adoption.