Web3 Funding Plunges in Q2 2023: A Sobering Report
In the second quarter of 2023, Web3 startups raised just over $1.8 billion, compared to $7.5 billion during the same period last year. However, a new report from Crunchbase reveals a significant decline in Web3 funding from venture capital (VC) funds. Here are the key takeaways:
- Web3 funding from VC funds dropped by 76% in Q2 2023 compared to the same period in 2022.
- In the first half of 2023, Web3 startups raised only $3.6 billion, a 78% decrease from the nearly $16 billion raised in the first half of 2022.
- Web3, defined as cryptocurrency and blockchain startups, has been severely impacted by the ongoing crypto winter.
- Overall VC funding decreased by 18% across all sectors in Q2 2023, but crypto-related funding experienced an even steeper decline.
- AI startups have become more attractive to investors, receiving $25 billion in funding in the first half of 2023.
Despite the decline in funding, there were still notable rounds in the first half of 2023:
- Worldcoin, led by Sam Altman, raised $115 million in a Series C round.
- Crypto protocol LayerZero secured $120 million in funding backed by Andreessen Horowitz, Christie’s, and others.
Despite the challenges, some firms remain optimistic about the future of Web3. Andreessen Horowitz highlighted the strength of the sector in its “State of Crypto” report, particularly in Web3 gaming. Binance Labs, the VC arm of the crypto exchange, is also interested in funding companies that bridge the gap between Web2 and Web3, especially in the gaming industry.
Hot Take
The decline in Web3 funding highlights the impact of the crypto winter, with investors turning their attention to AI startups. However, the continued optimism from prominent firms suggests that Web3 still holds potential, particularly in the gaming sector. It will be interesting to see how Web3 startups adapt and innovate to attract future funding.
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