Web3 Venture Funding Plummets in Q1 2023
Web3 venture funding has experienced a significant decline in the first quarter of 2023, dropping by 80% compared to the same period last year, according to data from K33 Research. This aligns with findings from The Block Pro, which reported a 79% decrease in VC investments, from $13.5 billion in Q1 2022 to only $2.8 billion in Q1 2023. Anders Helseth of K33 Research suggests that further declines could be on the horizon.
Key Points:
– Web3 and crypto saw a total of $15 billion in VC investments in the first half of 2022, but this number is estimated to be around $4 billion for Q1 and Q2 of 2023.
– Projections from The Block Pro anticipate a total of $12 billion in investments across 1,876 blockchain deals for the entirety of 2023, representing a 64% decrease in funding and a 24% decline in the number of deals compared to the previous year.
– In 2022, there were $33.2 billion worth of blockchain venture funding and 2,453 deals, according to The Block Pro.
Funding Decline:
According to Helseth, venture capitalists have lost confidence in investing in Ethereum alternative layer one protocols and projects related to NFTs and the metaverse. These were the two types of projects that received significant funding in 2022. However, a K33 report suggests that while the drop in web3 funding is not an immediate threat, projects must replenish their funds to avoid running dry.
Hot Take:
The significant decline in web3 venture funding raises concerns about the future financial support for projects in the blockchain and cryptocurrency space. With VC investments dropping drastically, it is crucial for these projects to find alternative sources of funding or devise strategies to regain investors’ confidence. The coming months will likely be challenging, but it also presents an opportunity for innovation and adaptation within the web3 ecosystem.
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