Web3.0 unicorn companies: Coinbase has the largest number of investments

Compilation | Baize Research Institute

Web3.0 is a decentralized iteration of the Internet. The protocols, applications and communities running on the blockchain are collectively referred to as Web3.0. The first applications to market are decentralized exchanges, prediction markets, stable coins and blockchain games.

Blockchain can be seen as a global computing platform that can run any program, which is why it is called a platform. It can not only store, it is also a global computer in which many isolated components can communicate with each other in real time and securely. This fundamentally changed the way companies operate. It makes possible a new model of collaboration and value distribution among peers, which is unprecedented in history, and will realize new innovations that we cannot predict today.

simply put

Web1:

  • Open source Internet protocols in the 70s and 80s, including TCP, IP, SMTP, and HTTP.
  • Designed in the spirit of openness and tolerance.
  • Anyone can build on them without anyone’s permission.

Web2:

  • Open source applications are difficult to monetize.
  • The business model of Web2 relies on building a proprietary, closed protocol on top of the open protocol of the Internet.
  • Several of these companies are now the most valuable companies in history. Although we use them for free, we must trust models with opaque codes.

Web3:

  • Like Web1, open source agreement, but collectively owned through cryptoeconomics.
  • Independent of traditional organizations, execute according to code rules.
  • Attach importance to user ownership and unauthorized access to open source software and data.
  • Create a sense of common identity and collaboration.

2021 is the year when Web3.0 enters the mainstream. From the humble niche Discord community, buying NFTs at high prices, to rebranding Facebook to Meta, your relatives and friends may ask why someone pays 30 for a monkey’s Crypto image. Ten thousand U.S. dollars.

This field excites users, and the demand for engineers with Web3.0-related skills is so great. In fact, in London, the salary of an entry-level blockchain developer familiar with programming languages ​​such as Solidity and Rust is almost 22% higher than the average salary of a software engineer, regardless of seniority.

Many venture capital funds are launching exclusive funds for Web3.0. Excited, I cannot resist the urge to analyze and explore unicorn companies in the Web3.0 field.

In this article, my purpose is to conduct a basic analysis of the current status of Web3.0 unicorn companies at the end of 2021.

I define Web3.0 as an ecosystem composed of decentralized applications and all tools. In order to find Web3.0 companies, I used Crunchbase database to obtain information by using (1) industry labels as blockchain, cryptocurrency and bitcoin, and (2) central labels as unicorns and emerging unicorns.

Secondly, I conducted a similar search to find the rest of the companies, except that I deleted the industry label to make it irrelevant to the industry. Similarly, I need to find the number of companies in the Web3.0 field, so I deleted the center label, but kept the industry label. In order to find vertical industries, I used the panorama provided by The Block Research, which includes an analysis of Web3.0. These vertical industries are (1) trading/brokerage, (2) infrastructure, (3) crypto financial services, (4) data and analysis, (5) NFT/gaming.

As of December 24, 2021, I have discovered 60 Web3.0 native unicorn companies, and the total number of all Web3.0 companies is 8785.

My analysis in this article focuses on:

(1) The percentage of unicorn companies in Web3.0 companies;

(2) Based on the number of investments in Web3.0 unicorn companies, which ones are the top investors in this field;

(3) Divide these enterprises into geographical areas;

(4) The composition of Web3.0 vertical fields;

(5) A preliminary estimate of the total revenue of Web3.0 unicorn companies.

One out of nearly 150 Web3.0 companies has become a unicorn

Of all 8,785 Web3.0 companies, 60 have become unicorns. According to historical data (it may not be able to accurately capture a snapshot of a Web3.0 company), as an entrepreneur who founded a Web3.0 company, you have a 0.7% chance of becoming the founder of a unicorn company. From the perspective of VCs, if you invest in 140 Web3.0 companies, you are very likely to become an investor in a unicorn enterprise. It will be interesting to see how this percentage changes in the next few years.

Coinbase has the largest number of investments in Web3.0 unicorn companies

When we look at the investors who invested in Web3.0 unicorns (only the top 5 investors reported by Crunchbase), we see that 152 investment/venture companies have invested in Web3.0 unicorns. Among the companies with the largest number of investments, Coinbase Ventures (19 investments, 32% of which became unicorn companies), Digital Currency Group (14 investments, and it is already a Web3.0 unicorn company), Andreessen Horowitz (12 investments), Ribbit Capital and Pantera Capital (9 investments each). The list may also see other disruptors in the venture capital industry last year, such as Tiger Global Fund (8 investments, top 6 in the number of investments) and SoftBank Vision Fund (4 investments). It is surprising to not see Web3.0 native funds such as Maven 11 Capital and MultiCoin Capital. I expect some of these funds will be added to the list in 2022.

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The U.S. becomes the center of Web3.0

With China’s severe crackdown on Bitcoin this year, the focus of Web3.0 has shifted to the United States. In fact, the United States surpassed China as the number one destination for crypto asset mining for the first time. As the A16z poll found that voters will prefer candidates who support Web3.0, it is expected that Web3.0 will be heatedly debated in Washington, DC in the future.

The prevalence of Web3.0 unicorns, coupled with the increase in Bitcoin mining activities, may be the reason why Web3.0 is so popular in Washington, DC. Among the 60 unicorn companies, 53% are headquartered in the United States, followed by China, which owns 5% (3 companies) of Web3.0 unicorn companies. Other countries on the list include Brazil, Canada, Hong Kong, India, Switzerland and the United Kingdom, each with 2 companies.

As decentralized finance (DeFi) has become an indispensable part of Web3.0, due to its core concepts of openness, decentralization, transparency, and permission-free, I have seen the technical staff of other countries in this new agreement Potential, which may increase the diversity of the headquarters of Web3.0 unicorn companies in the future.

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Trading/brokerage companies dominate this field, but NFT/chain games are on the rise

32% of Web3.0 unicorn companies belong to the trading/brokerage industry. This is mainly due to the popularity of exchanges (Gemini, Coinbase, Bitpanda, etc.) in the crypto trading market.

It is closely followed by vertical crypto financial services, which account for 28% of Web3.0 unicorns. These companies raised an average of US$580 million in total funding, which is US$180 million higher than the overall average of Web3.0 unicorns.

Throughout 2021, the key word of the year that the crypto community is discussing is NFT/blockchain games. NFT/blockchain game companies accounted for 13% of Web3.0 unicorn companies and raised an average of US$400 million in funds, but they are 25 months younger than the average Web3.0 unicorn company. As members of the global crypto community are actively looking for new NFT markets, I predict that the share of companies in this vertical will increase significantly in 2022.

Web3.0 has raised a total of 27.3 billion US dollars, what’s the next step?

There is no doubt that Web3.0 with a total capital of 27.3 billion US dollars is a topic that needs to be preserved, and it is only the beginning of the rising trend of Internet infrastructure and investment in the future. The purpose of Web3.0 is to create a decentralized network in which users can seamlessly transfer their data from one service to another without the corporate “walled garden” preventing them.

Blockchain and related applications, such as DeFi, NFT, GameFi, etc., are building the backbone of this trend. According to Crunchbase’s data, the highest and lowest annual revenues of all 60 unicorns are US$15.6 billion and US$4.2 billion, respectively. The value of Web3.0 unicorn companies cannot be measured solely by revenue like traditional businesses. Take one factor as an example, that is the composability of Web3.0 companies similar to Lego bricks. This composability creates unprecedented value.

Although it is too early to talk about investment trends in one or two years from now-but in terms of investment acceleration in 2021, we can confidently say that more and more market participants are coming in strongly.

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