Launching a startup is a life-changing moment: the ambition of transforming a dream into a real-world Web3 product or service starts to see the light. However, there are precious few options for financing, and one of them is venture capital, where startups need to convince investors to believe in their business idea.
VC funding has significant advantages, the main one being all the money needed to realize that idea. There are also several distinct downsides. Losing control is the biggest one. The money comes with the demand to have a say in how the startup is run. In most cases, they’ll even demand a seat on the board of directors, which means the founder will no longer have full decision-making power.
VCs are likely to determine the company’s overall strategy as well as minor details. Having taken and allocated the funds accordingly, the founder may be left with no choice but to deviate from their original plans. A worst-case scenario is crumbling under pressure from the backers and compromising on values or even ethics.
The risks of VC funding: Asset loss and growth pressure
The investors might push the company to sell assets if it fails to meet growth targets. The founder faces tremendous pressure to ignite growth and achieve maximum returns. Venture capitalists look for growth potential when they choose to back one company or another, and they push for the most rapid growth possible, sometimes forcing entrepreneurs to take risks that they never would if they had sole decision-making authority. The founder may even be compelled to adopt business practices that potentially jeopardize their business’ long-term health and prospects.
A shift towards alternative funding methods
As of April 2025, there are 16,752 Web3 companies, of which 103 are unicorns, with a total funding of $114 billion. Companies raised $3.8 billion in the first quarter of 2025, far off from the historical peak of $10.8 billion in the final quarter of 2021. In 2024, there was a 51% increase in funds raised through VC firms and 35% more deals compared to 2023. However, broader crypto market conditions prevented the Web3 venture market from reaching the 2022 levels of investment and overall activity.
Recent trends indicate a significant shift towards alternative funding methods, including self-funding. Self-funded platforms are not at risk of abandoning their founding ethics due to pressure from an external backer. The independent approach to financing has been pioneered by companies like Kairon Labs, a provider of ethical market-making services founded in 2019. The team generates strong revenue and growth, retaining full control over the company’s direction. There are no external investors or advisors, and the platform has built its success by being flexible and prioritizing clients’ needs.
Kairon Labs provides crypto platforms and top crypto exchanges with a market-making solution combining personalized support and advanced technology. It has facilitated successful token launches on Coinbase, Binance, and other leading exchanges. Its partners benefit from enhanced liquidity, smooth launches, and expert guidance, giving them the confidence to succeed. Kairon Labs guarantees responsible and transparent management of significant positions through ethical liquidation services for large token holders. Instead of allowing external investors to tamp down their focus on ethics, ethics have become their cornerstone, helping build a well-deserved reputation backed by strategic insight and experience.
Advantages of self-funding beyond freedom
Every penny counts when you’re financing each startup operation and covering each expense. Web3 founders learn to be particularly resourceful, finding creative ways to stretch their budgets and make the most of existing funds before spending more. They master the art of rearranging and optimizing to cover every need. This skill is crucial in the early stages when they have yet to make a profit.
Founders also learn to react quickly and adequately. They pivot and adjust with market dynamics or evolving priorities. They can afford to change course, responding quickly to client feedback and market volatility. An agile mind keeps one a step ahead.
Mitigating the risks of self-funding
It’s a world of cutthroat competition and timing matters. Self-funded platforms can’t afford to wait for the perfect opportunity to come. In the name of profit, they may have to sign deals with entities whose operations don’t align with their vision. They may have to pass on strategic partnerships or lucrative deals because they lack the resources to capitalize on them. Running a self-funded enterprise has been compared to running on a treadmill without an on/off button. It’s relentless, exhausting, and sometimes soul-crushing. With a growing list of tasks and responsibilities and limited resources, the risk of burnout becomes very real.
Symptoms of burnout include feeling detached or disconnected from clients and the business, as well as frequently getting sick, stomach problems or headaches. As a self-funded entrepreneur, constructively navigating burnout is essential. You must recognize the symptoms, take a break, and reconnect with your passion. Consider why you founded the Web3 startup, to begin with. You might find your goals have changed and no longer align with your core values. If that’s the case, you may need to delegate or hire new people so you can spend time chasing your passion or make even bigger changes, like reinventing the business to achieve value alignment.
One of the most significant advantages of self-financing is the chance to build a unique business from the ground up. It’s a test of determination and willpower. The pluses are undeniable, but so are the potential pitfalls. Self-funding is not for the faint of heart: you face burnout, fund shortage, and missed opportunities. The silver lining is personal growth, financial independence, and, above all, freedom.
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