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Venture Capital Financing of Web3 Down by $7.4B Y/Y
HomeNewsVenture Capital Financing of Web3 Down by $7.4B Y/Y

Venture Capital Financing of Web3 Down by $7.4B Y/Y

Daniela Kirova
Daniela Kirova
April 22nd, 2023
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  • Venture capital funding is down in almost every market
  • VC firms seem to be focusing on blockchain infrastructure companies

In the first quarter of 2023, VC-backed Web3 startup financing hit its lowest point in quite some time. It fell 82% year-on-year, dropping from $9.1 billion in the first quarter of 2022 to just $1.7 billion, Crunchbase data show.

This also represents a drop of 30% from the last quarter of 2022. Web3 funding is now around the lowest total of the last quarter of 2020 ($1.1 billion), when Web3 was still in its infancy.

Major deals also decline

Just 333 deals were made in Q1, down from more than 500 in the same period a year ago. In the first quarter of 2022, VC-supported startups raised more than two dozen rounds of $100 million or more each.

Polygon and ConsenSys raised $400 million or more, as did FTX and its US arm. In contrast, just two rounds reached nine digits in the last quarter, as venture capital firms appear to have paused Web3 spending for all intents and purposes.

The trend in blockchain startups is similar. They raised about $1.2 billion in Q1, the lowest total since Q4 2020, when they raised $820 million.

The biggest round was $125M by Blockstream

Blockchain tech solution provider Blockstream, based in Vancouver, raised the biggest round in the most recent quarter - $125 million. This was followed by crypto hardware provider Ledger, who added $108 million to a $380 million round announced earlier.

Is Web3 over?

Venture capital funding is down in almost every market. However, sectors with uncertain trajectory like Web3 are typically hit the hardest. In volatile times, investors seek out more traditional and established industries, like SaaS or cybersecurity.

Hope for the market

VC firms seem to be focusing on blockchain infrastructure companies, which are working on creating a foundation for Web3. These include QuickNode, Chain Reaction, and EigenLayer.

Bitcoin and ether also demonstrated resilience this year. Bitcoin gained 80% and ether rose 70% in the last quarter.

The crypto industry is slowly recovering from the dramatic collapses of Silicon Valley, FTX, and other crypto titans.

Contributors

Daniela Kirova
Writer
Daniela is a writer at Bankless Times, covering the latest news on the cryptocurrency market and blockchain industry. She has over 15 years of experience as a writer, having ghostwritten for several online publications in the financial sector.