Venture capital funds are eyeing Web3-powered social networks as the next major growth vector in crypto and blockchain.
Reddit co-founder Alexis Ohanian has teamed up with Solana Ventures to launch a new investment fund dedicated to Web3 and social projects, potentially setting the stage for the next wave of budding crypto startups.
Ohanian announced Tuesday at the Breakpoint conference in Lisbon, Portugal that his Seven Seven Six venture firm and Solana Ventures have allocated $100 million to Web3 and “decentralized social projects.” In an accompanying news release, the internet entrepreneur touted his venture firm’s expertise in “identifying and investing in early social and crypto trends,” which include Reddit, Patreon and Coinbase, among others.
Raj Gokal, the COO of Solana Labs, said “Web3 turns users and creators into owners and stakeholders, a change that can’t come soon enough to social media.”
Centralized social media platforms such as Facebook are said to generate hundreds of billions of dollars in annual revenue, mostly through advertising and without rewarding content creators for their contributions. While efforts to “decentralize” social media have been underway since at least 2017, no blockchain-based social project has reached mainstream adoption. Seven Seven Six and Solana Ventures said they will prioritize technologies and applications that [eliminate] value extraction from centralized intermediaries.”
Solana Ventures has been highly active on the investment front, having only recently spearheaded a $100 million fund dedicated to Web3 gaming, also known as GameFi. Similar funds were also launched by Sanctor Capital and Huobi Group. Over $17 billion in venture capital has flowed to crypto- and blockchain-focused startups so far in 2021.