Despite the uncertainty and regulatory challenges in the crypto industry, major venture capital (VC) firms continue to back new ventures in the space. Data shows that European DeFi startups experienced a 120% increase in VC funding in 2022 alone. In a recent interview, Martin El-Khouri, a senior director at Bertelsmann Investments, highlighted that the current state of the market helps investors distinguish between “noise and sound.”
According to El-Khouri, investing in Web3, or decentralized web, is a “hedge against disruption.” However, he also admitted that it’s sometimes “difficult to convince” executive leadership in large global corporations to dedicate attention to Web3 due to the industry’s fluctuating reputation. One factor that could help improve this situation is regulations, as they provide investors with more clarity about what is being built. “The more regulatory clarity we get,” El-Khouri stated, “the easier it becomes to evaluate different types of businesses.”
Another trend noticed by El-Khouri is the growing interest in generative AI and AI startups. Data from Marketsandmarkets projects that the AI market will reach $407 billion by 2027, compared to its $86.9 billion revenue in 2022. While investors may be pivoting toward AI, El-Khouri believes that “blockchain and crypto are going to be more important than ever before.”
He explains that the main value propositions of Web3 are magnified by generative AI, especially in the context of AI content creation. Blockchain can help solve the “double-spending problem without the need for an intermediary, and it gives provenance to digital assets.”
However, the marriage of Web3 and AI is not without its skeptics. Some argue that the volatile nature of the crypto market and the significant regulatory hurdles could inhibit the widespread adoption of blockchain technology in the AI space.
Still, the evidence of continued investment and exploration of Web3 and its potential applications in various industries, including AI, is a testament to its value. As long as the technology continues to evolve and mature, the potential for Web3 and AI to coexist and amplify each other’s strengths remains an enticing prospect for investors and innovators alike.
Source: Cointelegraph
