With every new Web3 startup purporting to be “deserving of our attention” or “revolutionizing the space,” it can be very difficult to cut through the noise. Given the current slump in the digital asset markets, new startups must find ways to shore up their business plans against the inevitable bear market. One ideal strategy is to pursue partnerships with like-minded startups. These partnerships and collaborations are already incredibly important in the Web3, NFT, cryptocurrency, and metaverse arenas because these spaces are community-centric. Partnerships boost your name recognition within other startups’ circles and help you earn credibility with the wider industry, laying the foundation for long-term success.
Three aspects of the Web3 space make collaboration a more natural affair, and you should capitalize on all of them. The first is that Web3 encourages transparency because the blockchain keeps records of all transactions. Ledgers on the blockchain and the rules of decentralized autonomous organizations (DAOs) are distributed and decentralized, necessitating you to be open and honest to your community. Track your startup’s next steps, and provide information to your community about where the project is headed. Beyond being an honest business owner, this will aid you in building a positive reputation.
The second feature is interoperability. To do anything in the Web3 space, you have to enter with the mindset of “Who will I be working with to get my startup off the ground?” As your product or service is reliant on the blockchain, you are bound to run into other startups who are either providing a similar service, or have a unique offering that you would like to access and provide your own users. Consider the space you are working in. If you’re an NFT developer, think about where your product will get more exposure. NFTs are implementable in metaverse games, so it makes sense to integrate with a metaverse platform for more users to enjoy your product.
Lastly, Web3 is about inclusivity. I’ve seen many business owners in the Web3 space adopt an inclusive mindset to business, whether it's with business partners, or who they attract into their communities. It must be this way if we want Web3 to be different from Web2, where corporate interests run rampant. The success of any of the digital assets, whether NFTs or metaverse-based, depends on more people buying into digital assets, so it’s important to cater to anyone who wants to join the market.
Inclusivity means community building, which is essential in the Web3 startup ecosystem. Attract and support new investors by utilizing dedicated social channels and forums, host AMAs to give people opportunities to interact with key executive members, and have community spotlights for members who are actively contributing to the space with new ideas or creative assets. Community-building is about making users feel like they truly belong to something that they themselves are helping develop.
Some good business advice for any collaboration, no matter your industry: find common ground with your potential partner, especially in your vision, business ethics, targeted audiences, and the value proposition. Because the Web3 spaces are community-centric, understanding your customers and the wider community’s needs is key for any project to succeed. Approach a potential partner having a clear idea about your own brand identity, and the overall goal.
Always have your unique advantage front of mind when entering into a partnership, and bring it to the relationship. Never lose your brand identity just because your partner may have a bigger name than you. If the collaboration dynamic is preventing you from getting the results you want, start again, and partner with a different brand that synergizes well with the goals of your startup.
While it may seem counter-intuitive, partnering with a competitor should not be at the bottom of your list. Instead, leverage a partnership with a recognized name in the industry if you have an opportunity to do so. The inclusive nature of Web3 means that any partnership is possible, and you’d be surprised by how open-minded startups in the space are.
A unique challenge in the Web3, NFT, cryptocurrency, and metaverse spaces is their newness – many types of startups, projects, and DAOs are in their infancy, so it’s not easily apparent that a potential partner is a scammer, a fraudulent crypto scheme, or a rug pull.
Do your due diligence. Look into a potential partner’s founders, previous projects, community building efforts, and general reputation. Get your community involved in the decision-making processes. Ask your investors for their honest opinion. Post a blog outlining the project’s goals and see what kind of reaction it receives. If your community – and maybe even the partner’s community – is hesitant about the new project, then don’t bother.
A great way to initiate a new collaboration is by starting with collaborations on one-off projects before launching into a fully-fledged partnership. If something goes wrong, you don’t want to find yourself tied up in a massive mess. Reputation is important in Web3, and even if issues are the fault of your partner, the general public probably won't see it that way.
Since Web3 and DAOs in particular are relatively new and unregulated spaces, the legal aspects of partnerships can be tricky to navigate. You can take advantage, however, of the transparency of the blockchain by implementing a clear set of rules in your smart contracts, which are visible to all parties. Smart contracts contain all of an organization's rules, which are set in stone once uploaded to the blockchain. Rules you should typically include here are the price of your product, the accepted currency, and the resulting product an investor receives at the conclusion of the transaction.
From the outset, be very clear about the content of your agreement, and make sure to detail which partner is responsible for what, what the scope of the collaboration is, and what the ramifications are if your partner doesn’t honor their commitments. Some ramifications you could consider putting in place are penalties for any kind of breach of contract, which could include financial compensation if the partner fails to deliver on agreed-upon tasks. To safeguard against a loss of profits if the collaboration was stopped midway, include a clause about paying in an agreed-upon amount of money by the party that failed to deliver.
Throughout the collaboration, use metrics to continually evaluate the progress and the success of the partnership. Some useful metrics for Web3 look at brand awareness: is your site getting more clicks, and is there an influx of new members? Are more people investing in your product or service? Note that in Web3, performance data about clicks and followers are not easily manipulated because the records are traceable and stored on the blockchain. Use the information to consider if the partnership is bringing real value to your community. Keep a record of these outcomes to determine the success of your collaboration at its conclusion.
Many businesses are looking for recognition in different Web3 communities, so you don’t need to pursue your startup journey alone. Web3 startups are in a unique position where you can leverage partnerships with both like-minded companies and your competitors. More people to collaborate with means more recognition and the chance to break into new communities. After all, without attracting new investors to your product, digital markets are just pure speculation.