The Changing Investment Landscape of the Web3 Industry: Insights from Three Notable VCs on Their New Strategy Focused on "Real Demand and Infrastructure"

## Current Market Environment and Investment Strategies

In April 2025, the TEAMZ WEB3 AI SUMMIT held at Toranomon Hills in Tokyo brought together notable projects and investors from around the world in the Web3 and AI fields. CoinPost took this opportunity to meet with representatives from several venture capital (VC) firms to exchange views on the current market environment and investment strategies.

• Ciara Sun – Founder and Managing Partner of C² Ventures.
• James Wo – Founder and CEO of Digital Finance Group (DFG).
• Joanna Liang – Co-founder and CEO of Jsquare.

Information Asymmetry and Assessing "True Ability"

In the Web3 industry, information asymmetry remains a challenge. Early projects have information that is distributed, making it difficult to discern the truth.

C² Ventures' Ms. Ciara explained, "In early projects, it is difficult to grasp the true nature of the team. We rigorously cross-check code update frequency, product progress, and industry evaluations instead of relying on self-reports or superficial networks."

Mr. James from DFG emphasized, "Do not be misled by flashy pitch materials; we verify the number of users, revenue structure, and technological capabilities. In the gaming and AI sectors, we leverage expert opinions and conduct thorough reviews."

Joanna from Jsquare revealed an approach that leverages a global decentralized team. She stated, "We have members placed in America, Europe, and Asia, collecting real information at local conferences and meetups."

These three companies, taking into account the decentralized characteristics of Web3, are exploring their own investment policies and setting clear goals.

Shift to infrastructure and actual demand areas

Unlike the bubble period of 2021 to 2022, investors are focusing on selection based on actual demand.

Mr. James from DFG pointed out, "We avoid niche markets due to their small market size. Short-term areas of focus also have scalability limitations." He added, "The timing of entry is also important, and we choose periods when infrastructure and demand have entered a growth phase."

C² Ventures' Ciara is focusing on cross-chain technology. They are supporting Axelar and LayerZero to build infrastructure that seamlessly connects blockchains. This allows users to utilize dApps without being aware of the boundaries of the ecosystem, which is seen as key to Web3 integration. Ciara stated, "A stable revenue model is key. If it's a great business, it's worth challenging even if the time cost is high."

Joanna from Jsquare is optimistic about the fusion of AI and Web3. She analyzed that "applications aiming for mass adoption and new technologies in AI and blockchain present investment opportunities." However, she warned that "projects reliant on stories without users or revenue will not sustain."

The sense of security brought about by the clarification of regulations

All three parties predict that the regulatory environment for Web3 will change within 1 to 2 years.

Joanna from Jsquare expressed her expectations, stating, "In the United States, the development of stablecoin legislation, compliance requirements for DeFi, and the classification of cryptocurrencies as securities or commodities are becoming clearer. The clarification of regulations provides a sense of security and reduces policy risks."

Mr. James from DFG is optimistic about the return of the Trump administration. He commented, "Regulations will shift in a friendly direction, supporting market growth."

C² Ventures' Mr. Ciara expressed concerns that while stablecoin legislation may enhance liquidity, there is a risk that "small projects could be eliminated due to licensing."

Asia's growth potential

The Asian market is gaining attention as a growth area for the future.

Joanna from Jsquare stated, "Asia provides the foundation for the spread of Web3 due to its population size and the vibrancy of its communities. However, regulations are not standardized."

Citing IMF data (2025 GDP growth of 4.2 percent, higher than the G7's 2.1 percent), C² Ventures' Ciara emphasized that "Asia's economic growth has great potential."

Mr. James of DFG stated, "Asia is important, but there are growth limits with locally exclusive products. We emphasize founders who have a global perspective and international competitiveness."

Summary

Interviews with the three companies reveal differences in investment policies, but there is a common emphasis on actual demand and sustainability. Along with expectations for regulatory development and market maturity, interest in the Asian market is growing, and Web3 investments are advancing to the next stage of growth.