Written by Hugh McGirr & Pete Townsend, Investment Team, Techstars Web3 Accelerator

Applications are now open for our Techstars Web3 2025 program, and we thought it was worth sharing some details on how we’re thinking about the next class - read on below! 

Networks

Networks, in essence, can be clusters of interconnected people, devices, data, assets and other stakeholders. Networks become more meaningful with ownership and more valuable as they expand. 

We invest in entrepreneurs who leverage technology to significantly expand access to knowledge, capital, well-being, freedom, energy and other resources that may have previously been more difficult to access.

Ownership

We spoke about the importance of serving a network participant’s skin in the game in Thesis 2.0. Well, one way to expand a market is to enable its participants (contributors and consumers) to engage more immersively, with more ‘ownership’. Blockchain promises new possibilities for large-scale human coordination, eliminating intermediaries and utilizing code + incentive systems. Blockchain promises enhanced ownership. 

This facilitates a new paradigm; a technological shift towards open, community-driven, and decentralized services which will transform how we interact, play, work, earn and conduct transactions. We are still very early in this technological shift, however… so early that we’re still victims of centralized social platforms whose algorithms are designed to retain us rather than best serve us. Imagine a new online paradigm which is like a city -which can expand upwards and outwards- instead of a gated walled garden of today.

Paradigm

Technological advancements and societal changes allow for behaviors that were previously impossible. This process of evolution sparks opportunity for new business models and new routes to market which existing companies often may not see, adopt or capitalize on due to their structure or due to market forces. 

Recognizing these new behaviors and opportunities in real-time as they develop requires more effort as new ideas and strategies are often best launched on the "fringes" of large markets. As put by Nick Grossman and Rebecca Kaden at USV:

“Startups emerging from these edges might appear to be merely supplementary or not to be taken seriously at first, but they can unexpectedly disrupt and challenge established companies, processes and networks.”

Founders

We invest in founders who can both articulate their path towards a future of more ​​open, community-driven, and decentralized services and who can mobilize the resources to create their own path.

Square pegs, round holes

Nevertheless, it is very hard (if not - proven impossible) to simply replace centralized entities with blockchain-based services (i.e. build the web3 version of a service we know in web2). Doing so typically requires a 10x improvement in user experience, knowledge gained, cost of capital, well-being, or in the use of energy or other resources.

Lego

As we wrote about in Thesis 1.0, web3's standout feature is its composability, as the ability to mix and match software components enables assets and data to be utilized seamlessly across multiple applications. This technology empowers entrepreneurs to innovate freely using tools like tokens, wallets, and composable protocols. It also introduces native monetization within open-source systems, providing a vast landscape for computational and financial experimentation. In this digital-first world, ownership of digital assets becomes a core element of the ecosystem.

Three verticals to onchain adoption

We believe there are three main areas which will deliver wider adoption of a more open, community-driven, and decentralized internet. 

They lie at the developer layer, the protocol layer, and application layer. They are infrastructure primitives,  incentivisation through token economies and the consumerization of the decentralized internet through better applications.

Unfortunately we are still quite heavy on the ‘casino’ context of incentivisation and we need greater levels of composable infrastructure and UX to better serve both developers and consumers. AI serves as the accelerant, helping to create the openings that enable opportunity (h/t Fred Wilson). 

Infrastructure Primitives - The Developer Layer

As an example, the developer conflict between security and usability has run strong in web3 historically.  With more focus on security, UX suffered, and vice-versa. To solve this, we’d like to see better lego blocks, with composable security primitives that developers can combine with composable UX primitives. Beyond security and UX, we’re looking for unique utilities and services at the protocol and application layers that leverage composability to provide developers with more scalable options.   

Related themes:  governance, incentivization models, storage, privacy/ZK, decentralized compute, DePIN primitives, identity, security, cross-chain interoperability, account abstraction, MPC, transition from desktop to mobile, modularity, app-specific roll-ups, wallet 2.0, media/IP monetization primitives, on/off ramps.

Incentivization - The Protocol Layer 

Tokenization enables new levels of ownership. As an incentive structure, it adds a value dynamic to an ecosystem - reinventing the social experience, integrating finance with social networks and radically reshaping the on-chain data economy with a proliferation of economic activities and capital markets on blockchain. It also offers the opportunity to de-risk a build as a different form of bootstrapping. Going back to a quote we referenced in our first thesis, we have Yan Liberman from Deplhi Ventures reminding us that:

“A token is a mechanism to organize a set of individuals. If you assume that they all act in their own best interests or in a way that is most logical for them, how do you organize them and combine those interests in a positive-sum way to create value?"

At their core, tokens are programmable assets, and the programming is defined at the protocol level.  What do we need to do at the protocol layer to enable the ‘organization of users in a positive sum-way to create value’ at massive scale, and sustainably? 

Beyond token-integrated incentives, we’re also seeing broader incentives driving token use.  For example, non-US individuals and businesses are incentivized to use USD stablecoins for savings, remittance and funding international commerce due to instant settlement, security and relative stability vis-a-vis their domestic currencies.  With this, we’re interested in the broader incentives driving global monetary networks to scale on-chain.  

Related themes: gaming economies, social protocols, DeFi and smart contract scaling, DePIN & RWA protocols (and their related accelerants), incentive-linked governance, institutional stablecoin adoption.  

Consumerization - The Application Layer

Blockchain represents a fundamental shift in how monetary and data networks operate - enabling decentralized, trustless, and secure transactions in a more open financial landscape. We’re seeing the adoption and scaling of digital currencies into core components of the global financial infrastructure and additional applications of blockchain are emerging across IP, RWAs, DePIN, payments, prediction markets, gaming and custody. While we look forward to more immediate use cases, we can expect many of these areas to escalate and proliferate towards larger markets, such as social, for example.

Related themes:  social networks as MVP, fintech/remittance, superapps, large addressable markets bringing daily users on-chain, incentivization models breeding network effects, public on-chain data economy, data sovereignty, no gatekeepers, stablecoin scaling, user-controlled data, media/IP networks, AR/VR/XR integration.

The AI effect - The Accelerant

Blockchain and AI will interdependently re-invent media, IP and the creator economy as we know it. 

Yet as the AI-economy needs blockchain for attestation, blockchain needs AI to instantly coordinate and infer data on a global scale. 

“AI will become a valuable, composable primitive that developers will leverage heavily in building the next generation of decentralized applications” - Nick Emmons, Founder & CEO of Upshot (via Coinfund).

Closing Caveat

Regardless of how all of this technology plays out over the next 10 years, everything still comes down to people. We invest in extraordinary founders who don't just find doors—they break through walls to create their own path.

If you'd like to apply for our Spring 2025 program, check out the program details here, and submit your application! For more information, please also scan through this fact sheet.

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