Crunchbase’s data reveals that Web3 VC funding has plummeted by 82% year-over-year, from $9.1 billion to $1.7 billion. Despite Ethereum co-founder Gavin Wood coining the term Web3 in 2014, reporting on the industry was limited until 2021.
Google Trends display a substantial spike in interest in December 2021, although it had been building up throughout the year. Chris Metinko of Crunchbase noted that deal flow also saw a decline, with “only 333 deals” completed in the first quarter, marking the lowest number of deals announced since the fourth quarter of 2020, and a sharp drop from “more than 500 announced in Q1 2022.”
Out of these 300 deals, only two managed to hit the nine-figure mark, namely Blockstream and Fulgur Ventures, with Blockstream receiving $125 million from London-based firm Kingsway Capital in January.
Ledger, a crypto hardware maker, secured $108 million in a Series C round with investors from 10t, Morgan Creek Capital, Cathay Innovation, among others.
On the other hand, Galaxy Digital found in a recent report that crypto startups saw a 20% increase in VC deals last quarter. The jump was mostly driven by pre-seed activity, though it notes that more deals didn’t mean more capital.
Altogether, VC funding came in around $2.4 billion, which is the lowest amount since the fourth quarter of 2020.
However, “crypto and blockchain startups raised less than half the amount raised just two quarters ago,” Alex Thorn, head of firmware research at Galaxy, wrote in the report.
Overall, Galaxy’s findings line up with what Crunchbase found, which is that “venture funding is down in almost every sector.”
“Web3 no doubt has been more affected by the dip since in uncertain times investors seek out industries they know best — such as cybersecurity or SaaS, not the promise of the next iteration of the internet.” Metinko noted in the report.
Ledger, a company that develops crypto hardware, raised $108 million in a Series C funding round with investors from 10t, Morgan Creek Capital, Cathay Innovation, and others.
In contrast, Galaxy Digital reported that crypto startups witnessed a 20% increase in VC deals during the last quarter, which was primarily driven by pre-seed activities. However, the report highlights that more deals did not necessarily translate to more capital.
In total, VC funding amounted to approximately $2.4 billion, the lowest it has been since the fourth quarter of 2020. According to Alex Thorn, Head of Firmware Research at Galaxy, “crypto and blockchain startups raised less than half the amount raised just two quarters ago.”
Galaxy’s findings align with those of Crunchbase, which states that “venture funding is down in almost every sector.” Chris Metinko, a writer at Crunchbase, noted that “in uncertain times, investors seek out industries they know best, such as cybersecurity or SaaS, not the promise of the next iteration of the internet,” which has undoubtedly impacted Web3 more significantly.