RISKS AND CHALLENGES OF WEB3 STARTUPS AND METHODS OF SOLVING THEM

Abstract

This article begins with setting a definition for a Startup, explaining how a startup different to an enterprise in general.Further the article lists and describes the typical risks and challenges with which startups often have to deal and proceeds with methods of how startups mitigate the risks and solve the presented challenges.In that chapter the readers can find descriptions of such risks as problems with access to finance, talent acquisition, market need, competition, planning, customer acquisition, regulatory compliance, scaling, cash flow management, and unrealistic expectations.In the following chapter the article defines the Web3 startups and describes how they differentiate from startups in general.In that chapter readers can find an overview of fundamental Web3 principles, including decentralization, blockchain technologies, and smart contracts, and an explanation, what characteristics make Web3 startups different from startups in classical sense, the article brings a list of specific risks and challenges that are met by Web3 startup founders.Classifying risks such as lack of crypto adoption, Web3-specific security risks, regulatory uncertainty, vendor management problem, the challenge of fundraising in Web3 environment and Interoperability problem -all these risks are to be considered by founders when starting a Web3 project.The final chapter provides methods of solving the presented Web3-specific risks and challenges, 7(35) 2024 137 taking into account that every startup is different and offering several methods of solving every described problem.Authors do not endorse any particular solutions, however they make real life examples when explaining possible solutions to such problems as legal uncertainty and interoperability problems.In general authors stress that this material is a good base for further research and Web3 founders should not take any given examples as a ready-made solutions without consulting experts or doing their own research.The article contains useful material for founders of Web3 Startups and people who are interested in studying the process of running a Web3 startup at an early stage.