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Adaverse supports a wide range of Web3 startups across Africa | Tech Cabal

These days almost everyone is talking about Web3, the third iteration of the internet that is primarily based on blockchain technology, spawning an army of Web3 enthusiasts and startups.

There are 15,648 web3 startups worldwide, of which 79 unicorns have emerged, per Crunchbase Web3 Tracking.

Despite the growing population of web3 startups, African web3 startups represent less than 1% of the total number of web3 startups and have raised roughly half a billion dollars in funding, compared to 88 billion dollars raised worldwide.

In October 2021, the Opponent was created by EMURGO (parent company of the Cardano foundation) and Everest Ventures Group, a venture capital studio based in Hong Kong. They launched the accelerator to address this imbalance and support blockchain founders in Africa and Asia with funding, mentorship, and technology infrastructure to scale Web3 solutions across the globe.

Over the past year, the $100m-funded accelerator has backed notable African startups such as the Zimbabwe-based Pan-African Freelance Marketplace Afriblocsstarting the cryptographic infrastructure Cassava NetworkStarting Challenge stake fair and 10 other African startups. The accelerator invests between $50,000 and $750,000 in startups.

On a call with TechCabal, William Phelps, chief investment officer at Adaverse, explained how the accelerator invests in African Web3 startups.

Daniel Adeyemi: One thing you highlighted at the recent Lagos Blockchain Founders Meetup is that the Adaverse is not just looking to invest in cryptocurrency exchanges, because blockchain is more than cryptocurrencies. Why is this important to you?

William Phelps: I think it’s interesting that you mentioned crypto exchanges, which is a good starting point for the whole web3/blockchain space. A big problem globally is that when people talk about blockchain, they are automatically associated with cryptocurrencies. And although crypto is part of blockchain, blockchain is not about crypto. I think the problem that this type of thinking causes is that there is a kind of confusion that is very unnecessary because people assume that the only use and benefit of blockchain is quick profit from trading functionality and exchange.

One thing that we have seen in Adaverse and especially in Africa is that there is a wide variety of use cases that blockchain can provide. And the reason why I say that is because I think in African markets there are very clearly defined pain points, whether in finance, access to services, infrastructure, etc. And blockchain provides solutions to each of these problems in very innovative and diverse ways. .

So a big part of our investment strategy, beyond just being investors, is actually looking for projects that target specific pain points and have real-world effects and local utility.

We look beyond simple innovation for the sake of innovation.

DA: What do you pay attention to when investing in startups?

WP: We are an accelerator; we don’t invest in projects that are too early because if it’s just a concept, we can’t accelerate it. We look for projects that have a minimum viable product (MVP) and have some initial traction. We are also looking for tokenization potential, because at Adaverse we specialize in tokenomics and token support, and given our ties to Cardano, we like to work with projects that are open to tokenization on Cardano and the development of these tokens with Adaverse.

More generally, though, seeing a strong founding team is very important because I think something that isn’t discussed enough in the startup space is co-founder synergy: the ability of co-founders to work together with same goals. From an investor’s perspective, if we see discord within the founding team itself, that doesn’t inspire confidence.

Beyond that, the existence of the team in the first place is very important, because even if it is very noble to be a single founder who builds everything yourself. It is very difficult to evolve on this basis.

It is worth mentioning that Adaverse is very flexible, while we focus on investment strategy and philosophy, all the things I mentioned are not red lines in any form.

DA: Can you clarify what you mean by tokenization?

WP: We are looking for an opening on which to build and tokenize Cardano, which is a popular blockchain platform. Adaverse provides a lot of token support, especially through the accelerator program. We help companies that want to issue tokens, develop tokenomics plans, and examine the technology behind them. The best way to do this is when tokenized on Cardano, as our position within the Cardano ecosystem gives us very deep network access to tech support logins.

DA: How is the Adaverse Accelerator different?

WP: There are two main selling points for the accelerator: connection and composition.

I believe our position within the Cardano ecosystem makes us the best placed investor and accelerator for projects looking to build on the Cardano ecosystem, as we have a very deep network of technical assistance and fundraising assistance compared to other VCs and institutional investors I know.

Adaverse is unique among many investors and accelerators as we are very active on the ground in Nigeria, Africa and globally.

We pride ourselves on being very grassroots and early stage focused, which lends itself well to our acceleration program. So I would say we have a better understanding of the market and how blockchain works within that market to make the right investment decisions and support those projects. This is very beneficial from a commercial point of view, but also for the development of the African technological ecosystem.

DA: How long does it take to decide to invest in a startup?

WP: So usually when we receive an application we have a very basic overview of the nature of the project, the founding team and the traction behind the project. As I mentioned before, because we are an accelerator and not an incubator, it is important that projects have some traction and have at least a basic MVP built and a corresponding go-to-market strategy.

Once we have ensured that the application meets these criteria, we move on to an initial meeting to better understand the project, its orientation and its fundraising needs. Then we will have a new call with the Cardano foundation, then if we decide to invest, we commit.

In terms of precise timing, it’s hard to say because all projects are different in terms of the information we need and how quickly they are able to deliver that information.

We aim to decide within a month. People can apply through the website or send me an e-mail.

DA: What are the red flags?

WP: The first thing that always comes to mind is the desperation of an initial coin offering (ICO) before there is actually a product. We see many founders releasing a token or their own cryptocurrency as a fast track to funding.

We meet guys who claim they will hit a billion chips worth $1 each.

So anytime we see projects that are leading with a token that don’t have a product yet, it’s an automatic red flag for us that they’re not that concerned about building the product, but rather concerned about making a quick buck.

I say this to all startups, if you can’t describe what your company is trying to do, in one sentence or less, it’s probably not a very good company. So far, simplicity is key. Know why you’re building it, what it’s trying to do, and what problem it’s going to solve.

The third and final thing is that it’s very tempting for solo founders, especially those who may not have the best blockchain technical background, to outsource much of the development and technical work to third-party developers. These third-party developers have no commitment or obligation to the project and may in fact carry many risks with regards to things like intellectual property and go-to-market strategy. It’s always a red flag that makes us less willing to commit to a project, knowing it’s not being built by a full-time team.

DA: What are the main trends you see in the Web3 space?

WP: I think we are at an interesting time and even at a crossroads to some extent for two reasons. From a regulatory perspective, we are gradually starting to see a trend towards regulatory acceptance of blockchain, digital assets, and cryptocurrency. That, in turn, I think, gives founders more confidence to start building bigger and better solutions knowing they won’t be penalized or shut down by regulators for it.

Now, of course, this is all just in its infancy. We know that the Central Bank of Nigeria has not shown acceptance and in other African countries regulators are rather silent.

There is also a lot of optimism about the future of this technology in terms of investments. A common trend that I used to see was that the majority of companies in Africa that received investment were either founded by Africans who had been educated abroad or by Africans who had grown up in abroad and returned to Africa.

Whereas now we are starting to see the rise of what we might call more indigenous projects, projects that are built in Africa by founders who grew up in Africa and are applicable to the African market as real solutions to many real problems.

These two points overlap, which means that in the next three to five years, we are going to see the real fruition and blossoming of the African Web3 and Web2 space as we have seen in Southeast Asia. It’s exciting for both investors and founders.

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