Web3 Founder Survey: Product-Market Fit and Timing Are Most Existential Challenges

Results from our survey of >100 web3 founders show that founders are optimistic about the underlying tech, regulation, and fundraising. They’re worried about finding product-market fit and timing the market.

Bloccelerate: What is the largest / most existential problem that you're facing this year?

Founder: How long with the trough of disillusionment last?

Survey Content

The survey covered 13 questions, meant to elicit both open-ended qualitative responses, as well as structured rankings of common challenges faced by web3 founders.

Responses to the survey reveal factual information (e.g., how many years have you been in the industry?), opinions (e.g., what is THE single most existential problem facing the space), and preferences (e.g., what help do you need most right now?)

Survey Findings

Finding PMF was voted as the most “existential” problem by the concentration of votes. More than 20% of respondents considered it the largest existential problem.

It was also consistently the most pressing challenge across all stages of startup captured by the survey (bootstrapped/pre-seed - series B). Even for later-stage companies who typically are expected to have found PMF, this was considered a challenge.

The next most pressing challenge by number of votes was product-market timing. Many of the qualitative comments focused on the “bear market”, and how the dramatic fluctuations in the crypto market make it difficult to sustainably build and launch products.

This is particularly difficult to manage because many founders start building in anticipation of more positive market conditions but have to carefully time their marketing, fundraising, token launches, etc.

Despite common narratives, fundraising was NOT seen as an existential issue for most respondents. 26% of respondents considered fundraising to be “not a problem”, and more than 50% considered it to be “a challenge but not existential”.

Another surprising finding was that most respondents did not consider the scalability or performance of the underlying technology to be existential. More than 40% of respondents rated this “not a problem” despite the industry's focus on developing/funding infrastructure.

Based on the quantitative and qualitative survey results, the top priorities for web3 startups are:

• finding product-market fit
• timing the market correctly
• addressing regulatory or compliance concerns

Who Responded to the Survey?

Survey respondents include 100+ Web3 CEOs & founders representing a broad spectrum of Web3 and blockchain projects, across North America, Europe, the Middle East, and Asia Pacific Regions.

Respondents represented startups from the earliest stages to post-Series B. 70% of respondents were seed stage or earlier.

Most respondents were “web3 veterans” with 3+ years in the market. Nearly 40% had been operators in the blockchain/crypto space for 5+ years.

Are These Results Unique to Web3?

Yes and no. While the broader startup ecosystem is going through a reckoning (with the possible exception of AI startups), we believe these results reflect unique elements of the web3 ecosystem. Through several cycles, web3 has proven to have exceptionally exuberant highs and despondent lows.

These conditions permeate all aspects of a web3 startup, regardless of whether it’s infrastructure or consumer-focused- whereas more “traditional” startup models like B2B SaaS don’t experience the same sentiment volatility.

For example, web3 teams fundraising in March 2022 and November 2022 likely had totally opposite experiences.

Another web3-specific dynamic reflected in the survey is the relationship between infrastructure and adoption. At the peaks of activity driven by DeFi and NFTs, it was clear that the existing chains and tools were insufficient. This drove the investment of funds and talent into scaling solutions and UX improvements that are just starting to pay off now.

As a result of these improvements and lower volumes, most founders believe the tech is sufficient, and the new problem is developing use cases that show clear value to consumers. We believe that these use cases will emerge and that the relationship between infrastructure and adoption will likely “flip” again.

Are These Results Good News or Bad?

These results are clearly mixed, and certain aspects are encouraging. We have to acknowledge that the search for industry-wide product-market fit is ongoing. However, most founders believed it was a matter of “when” the bear market ended, not “if”.

It’s also important to note that we collected responses before Bitcoin’s recent rally, so this optimism was not driven by broader price action.

Another piece of good news is that the founders were optimistic and resilient in the face of regulatory headwinds. Only 8% of founders considered compliance/regulation to be an existential concern, despite many of this year’s headlines focusing on enforcement actions and court cases.

While it’s clear that the industry has done (and will continue to do) some soul-searching, we interpret many of the responses as positive.

We want to say a special thank you to the founders who took the time to share their thoughts and challenges with us. We greatly appreciate your time, your insights, and your drive to continue building through market headwinds.

A full report of survey results can be found at:

https://bloccelerate.vc/2023-founder-survey-results/