Bertelsmann Investments in Web3 - A new internet architecture in the making
At the very beginning, the internet was a research project. When it started to emerge, it was an internet pursuing only one goal: Maximizing the reach of information. It was a static Web, without trust systems, user identities or economic incentives. Even when the possibility to send e-mails appeared, people doubted that the internet would be a lasting thing. With the burst of the DotCom Bubble in the early 2000’s, many critics felt confirmed. As the daily mail wrote on December 5, 2000:
“Internet ‘may be just a passing fad as millions give up on it’. “
But the internet has continously transformed, and stood the tests of time. Technological advances gave birth to interactive content. This advanced internet is the internet we know today: An evolved internet with open participation and contribution mechanisms. A front-end revolution. Web 2.0.
In the 21st century, business without this internet is unthinkable. It was the centralization of internet services that has led to the onboarding of billions of people to the World Wide Web. This centralization created a stable and robust backbone on which internet businesses thrived.
But: In this internet, dominated by powerful platforms, there is still no framework for economic incentives. The internet we know today is defined by a small number of platforms, which in essence function according to the same logic. Usage of these platforms is free. Users pay with their data. And the data is monetized by advertisement. That is the currency of the internet we know today.
Web 3.0 comes in as a back-end revolution, in which value creation in the digital space is reinvented.
Ownership is transferred from companies to communities. In this emerged internet, we have the maximized reach of information and user generated content, combined with a digital logic of ownership. This combination is made possible by the application of blockchain technology, and is creating a new infrastructure layer for digital businesses, just like the internet. Web3 hence does not only propose to be the answer to the dilemma of a centralized Web, offering usability and efficiency while embracing decentralization and being built, operated, and owned by users. It also implements a new ownership logic, transferring power, governance and responsibility to the hands of individuals rather than corporations. This will likely affect the way, value is created in the digital world going forward.
22 years after the above cited Daily Mail article, the Web3 space is facing a similar situation, with the total crypto market capitalization being in a constant downturn. At the same time, adoption of Web3 is following the exact same pattern as the adoption of the internet. If this trend continues, we could see between 1 and 1.5 Trillion Web3 users by 2027. Value creation in Web3 would then be part of the corporate mainstream, leading to the largest disruptive shift since the emergence of the early internet.
As a global, Corporate Venture Capital Investor, and part of a globally renowned content, services and education Group, it is important for us at Bertelsmann Investments to closely monitor the impact, this technological infrastructure shift has on our businsess models to support the likely inevitable transformation, many of our businesses will go through into a Web 3 economy, by picking the right projects to support.
This overview is indicative of where we are standing and how our portfolio currently looks like. It is a starting point at BI for further endeavours to support divisional innovation and structurally bridge startup innovation and meet divisional interest.
Much more exciting news and developments to follow in 2023. Stay tuned. Merry Christmas and Happy Holidays!
If you would like to get to learn more about some of the startups specifically, please reach out!
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