“What leg of the journey is this, and what’s behind that hill?!”

It’s a typical conversation in an emerging category, but perhaps no more so than in crypto, as a technical and social movement evolves on top of what feels like the careening rails of a roller coaster (or some days, a haunted house.) Web3 enthusiasts are passionate advocates for the future, tirelessly demonstrating the next iteration and eager to set the record straight when the mainstream may not quite see the vision that drives us. We have maxis, DAOs, crews and alpha. Gossip and good journalism. And if we didn’t already collectively track every headline and court ruling, or every candlestick that might suggest the market is about to rip — there’s no shortage of year-end speculation, often contradictory but promising clarity on what to expect in 2024.

But if you want to know where things are headed, just ask the builders.

Introducing the 2024 CoinFund Founder Forecast

In November 2023 CoinFund surveyed the Founders and/or CEOs of 30* portfolio companies regarding their growth outlook for web3 in 2024. The results validate what we hear from founders every day; the majority intend to grow and hire next year, and are optimistic about the future of web3 across various verticals, from the intersection of blockchain and AI to unlocking zero knowledge infrastructure.

Despite this optimism, one in four respondents said that U.S. regulatory uncertainty is greatly impacting their 2024 approach. As these leading entrepreneurs adjust their resourcing and strategies to react to U.S. regulatory movements and view other jurisdictions such as Singapore as more conducive to supporting their innovation, the U.S. risks losing 1) its technical edge via the benefits of the hard work of these teams, and 2) the economic impact to be built atop the new internet.

Respondents to the survey represent a cross-section of CoinFund’s portfolio companies and have cumulatively received nearly $1.5B in funding across their lifetimes.

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The founders’ collective attitude toward growth is optimistic but prudent, perhaps after learning to operate conservatively through a tough market. 70% of those surveyed describe themselves as “optimistic” about startup opportunities for crypto and web3 and 70% intend to hire next year — none intend to downsize. (Some of those roles are already live on our careers page. Check it out for both technical and non-technical positions.)

In order of demand:

• Product / Engineering 34%
• Marketing Strategy / PR/ Content 22%
• BD/ Sales 20%
• Developer Relations 12%
• Legal / Operations 9%
• HR, Recruiting & Talent 5%

Half of the founders polled do not intend to raise capital next year. Those who do are likely to aim for $5–10M (20%.)

2023 was a year of reinforcement. Backers and technical teams who were truly committed to the long term dug in deeper, and many newly funded companies tackled infrastructure to drive efficiencies and scale the blockchain, readying the industry for mainstream consumer demand. It tracks that portfolio respondents predict that 1) Web3 x AI; 2) ZK; and DeFi & Consumer Apps (tied for 3rd) are the sectors best positioned to grow in 2024. Gaming, Layer2s and Wallets were tied for fourth, with Real World Assets, NFTs, DePin and ‘Web 2.0 to Web3 Services’ rounding out the list.

If you’re thinking about starting a company, have you considered Singapore? Seven founders named it the most founder-friendly country for crypto startups right now. Leaders praised its access to capital, “fairly clear and friendly” regulatory environment, and the country’s position as a gateway to the Asian and global ecosystems. The U.K. is favored for its talent pool and recent regulatory developments and its access to broader E.U. And the U.S. received favorable mentions — really — for its density of talent, ability to network and 360 infrastructure for small businesses, although SMB banking and an opaque regulatory environment made founders weary. As Evan Kohlmann, Founder and CEO of Cloudburst Technologies believes, “The most founder-friendly country in the world for startups is the United States, but if the U.S. doesn’t work on adopting standardized crypto regulations (as other nations have around the world) the legal environment will not permit crypto businesses to operate — even as other tech startups manage to thrive in the exact same environment.”

Of 20 U.S.-based Founders, eight non-U.S. and two anonymous, nearly all respondents (97%) describe themselves as “well or semi informed” on U.S. regulatory developments; 80% of participants were “well or semi informed” on regulatory developments outside the U.S. One in four respondents said that their strategy was informed greatly by the U.S. regulatory landscape and had already adapted their approach or planned to invest resources differently next year.

Additional 2024 Insights from Founders Surveyed:

GROWTH

The next big wave of applications of decentralized technology will solve problems in the traditional world where decentralization has a unique value unlock (e.g. competition dynamics within resource incentivization.)
Ben Fielding, Co-Founder, GenSyn

Growth in Web3 will come not from single killer apps but from killer use cases, because the killer feature of Web3 is composability — aka leveraging assets and data across multiple applications. Two trends will make this far more likely to breakout in 2024:

1. The PWA + passkey model making it far faster to experiment around consumer applications

2. Web3 data stack being usable and scalable, bringing more complete composability
Danny Zuckerman, Co-Founder, 3Box

AI

Decentralized AI will be the fastest growing category in crypto over the next 18 months. AI will become a valuable, composable primitive that developers will leverage heavily in building the next generation of decentralized applications. Nick Emmons, Co-Founder & CEO, Upshot

CONSUMER

The intersection of AI, media, and global blockchain coordination sets the stage for a whole new wave of mass consumer adoption. If AI lowers the barrier dramatically for mass creation of media such as video and music, then human curation and tastemaking becomes important. Blockchains are uniquely suited to instantly coordinate people on a global scale to provide this cultural curation. The result will be forms of media more interesting and engaging than the latest innovations like TikTok style shorts, and this is the example of “something new” that it takes to disrupt existing social media network effects.
Doug Petkanics, Co-Founder & CEO, Livepeer

2024 and 2025 will see the first wave of true mass market adoption of consumers as gaming leads the wave of breaking down the barrier and will impact the industry even more than Free To Play as a business model did to the gaming industry. [This] will drive an M&A spree as bigger gaming studios realize that small teams are now lean and very mean with the help of AI and can make much better profit with the new business model that caters to how players want to experience wealth progression in games. Welcome to the future of gaming.
Aké Andre, Founder & CEO, Crypto Rogue Games, building Naramunz

I predict that the future of blockchain is dependent on the removal of barriers to entry for broader consumers and giving them experiences and utility that positively contribute to their existing behaviors, whether that be around gaming, finance, social, etc. Right now, blockchain as a technology is presented as some revolutionary advancement on a pedestal when in reality it needs to be abstracted enough to the point where it becomes as boring, and as useful, as one click, two-day shipping on Amazon. Nobody sits there and talks about what a miracle it is that you can get almost any item delivered in record timing, it’s just the expectation for a positive modern commerce experience. Once blockchain companies embrace that approach and get their products into the hands of people who would otherwise scoff at the notion of opening a Metamask wallet, then they will have made it.
Noah Diskine Kline, Founder & CEO, Wincast

The next year will see regulatory downside capped and as a result, products that leverage crypto rails for more traditional economic and social functions will see significant growth.
Luke Truitt, Co-Founder & CEO, Bridgesplit

DEFI & REAL WORLD ASSETS

This is the year TradFi steps up in a big way. Any products that support their adoption are poised for success. I’m very excited about more friendly ETH staking solutions.
Aaron Nevin, Founder & CEO, Moon Mortgage

I believe we will start to see tokenized real world assets moving into innovations conceived in DeFi.
Graham Rodford, Founder & CEO, Archax

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CoinFund exists to champion the leaders of the new internet — and if the enthusiasm and expertise of the group surveyed is any indication, our portfolio expects a powerful year for builders and the growth of the ecosystem. However, this optimism and potential is being stunted by regulatory uncertainty in the United States. Now more than ever, we need regulatory clarity for our entrepreneurs so they can materialize the opportunity and economic benefit that they predict.

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*Survey was requested of all 100+ portfolio companies. The 30 included in analysis were the companies to reply by publication deadline and represent a cross-section of web3 including but not limited to various infrastructure, AI, ZK, NFT, deFi, gaming and consumer applications.

Disclaimer: The views expressed here are those of the individual CoinFund Management LLC (“CoinFund”) personnel quoted and are not the views of CoinFund or its affiliates. Certain information contained herein has been obtained from third-party sources, which may include portfolio companies of funds managed by CoinFund. While taken from sources believed to be reliable, CoinFund has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by CoinFund. An offer to invest in a CoinFund fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by CoinFund, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by CoinFund (excluding investments for which the issuer has not provided permission for CoinFund to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://www.coinfund.io/portfolio.

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