Investing in Web3 is a ‘hedge against disruption’ — Corporate VC

The crypto space has been facing waves of uncertainty in recent months, with looming regulations from authorities worldwide and a lingering market downturn.

Despite the state of the industry, investors are still backing new ventures in the space. Data shows that in 2022 alone, European decentralized finance startups experienced increased venture capital (VC) funding of almost 120%, reports Cointelegraph.

Martin El-Khouri, a senior director at Bertelsmann Investments, spoke to Cointelegraph during the Proof of Talk blockchain conference in Paris about why major investment firms still see Web3 as a way forward.

Bertelsmann Investments is one of the world’s major VC investment firms, with around 1.7 billion euros invested in over 400 companies worldwide.

El-Khouri told Cointelegraph that the firm’s BDMI fund made its first investment into the Web3 space in 2016, and the current market state helps investors distinguish between “noise and sound.”

“Now that the hype is gone, investors can see where the actual value is being accrued, which projects are just artificially inflated and which ones are built and based on a solid foundational framework.”

He said he considers investments in Web3 a “hedge against disruption.” However, he says it’s sometimes “difficult to convince” executive leadership in large global corporate entities to dedicate attention to Web3 due to the industry’s fluctuating reputation.

However, he highlighted that regulations help the industry in terms of investments because it gives investors more clarity about what is being built.

“When you invest in a project, you want to understand whether there is a big regulatory risk that could prevent this business and business model or idea from flying.”

“The more regulatory clarity we get,” he said, “the easier it becomes to evaluate different types of businesses.”

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