Corporate VC Web3 Investments are the Ideal Hedge Against Disruption.

A senior director at venture capital firm Bertelsmann Investments, Martin El-Khouri, has stated that Web3 investments are the best way to hedge against disruption in the tech industry.

Despite the challenges posed by regulations and market downturns, investors are still funding new ventures in the Web3 space, with decentralized finance (DeFi) startups alone seeing a significant increase of nearly 120% in venture capital funding in 2022.

El-Khouri spoke to Cointelegraph at the Proof of Talk conference in Paris last week, emphasizing the importance of distinguishing between genuine value and artificial inflation in the market for Web3 investing.

El-Khouri stated that investors are now able to identify projects built on solid foundations with the hype in the space subsiding.

He explained that many investors now see Web3 investments as a strategic move to “hedge against disruption.”

However, he acknowledged the difficulty of convincing corporate leaders in large global entities to pay attention to Web3, as the industry has a certain reputational problem that needs to be addressed for traditional corporate leaders to take it more seriously.

“When you invest in a project, you want to understand whether there is a big regulatory risk that could prevent this business and business model or idea from flying,” the VC investor said.

Regulatory clarity benefits crypto

Despite the difficulties in convincing some executives, El-Khouri emphasized that regulatory clarity actually benefits investments in the Web3 and crypto sector.

“The more regulatory clarity we get, the easier it becomes to evaluate different types of businesses,” he said, nodding towards the EU’s new Markets in Crypto-Assets (MiCA) regulation.

Growing interest in AI

In addition to Web3, El-Khouri noted the growing interest in generative artificial intelligence (AI) and AI startups, with the AI market projected to reach $407 billion by 2027.

Nonetheless, El-Khouri believes that blockchain and crypto will play an even more crucial role, particularly in conjunction with generative AI.

He explained that blockchain can address issues such as the double-spending problem and provide provenance to digital assets, which is especially relevant in AI content creation.

El-Khouri concluded the interview by saying, “Blockchains can solve the ‘double-spending problem’ without the need for an intermediary, and it gives provenance to digital assets.”