- Crunchbase’s data reveals a major decline in funding in the Web 3 start-up space
- Venture capital funding has hit a low for all spaces
- More data shows that the crypto space has also seen a decline in funding compared to 2022.
Crunch base has dropped data that shows venture capital funding into the Web 3 space hit rock bottom and tanked 82% year-over-over, a significant decline from $9.1 billion in Q1 of 2022 and down to 1.7 billion in Q1 of 2023.
News from Crunchbase highlighted the extent of the data in an April report, noting that the amount of $1.7 billion recorded for Q1 of 2023 also accounts for the lowest amount that has gone into funding for Web 3 startups since the $1.1 billion that was posted in Q4 of 2020, which was at a time where the popularity of the Web 3 space was significantly low.
Web 3 startups are best defined as companies in their early stages working directly with crypto and or blockchain technology.
The overall number of deals closed by Venture capital firms and Web 3.0 businesses hit a historic low of 333 in Q1 2023, down by about 33% year on year.
The survey also noted a significant drop over the previous year in the frequency of large investment rounds for Web 3 startups that were previously recording nine figures.
Over $100 million was raised in 29 separate investment rounds led by venture capitalists in Q1 of 2022, with significant contributions from ConSenSys and Polygon technologies (each raising $400 million or more) and FTX and their U.S. affiliate (each contributing $50 million).
Two nine-figure fundraising rounds occurred in Q1 2023, with venture capital firms pausing their support of Web 3 startups. New entrants and public interest may have waned in the Web 3.0 field recently, but the point remains that venture capital financing is down across the board.
Crunch base also added that a large majority of the decline could be due to investors choosing to opt for a risk-off route to Web 3 space over the past few months and seeking out opportunities in industries with fewer risks like cybersecurity or SaaS and not the Web 3 space.
There is, however, a bit of positive news in all this as the prices of bitcoin and ether have seen a significant lift since the beginning of the year, and while it is not sure that it’ll bring enough money back into space, time will tell.
Conclusion
A different report written by Galaxy Research earlier this month looked at a broader view of venture capital investment into all crypto companies for the past year and an insight into the recent trend in web space funding. The report stated that the $2.4 billion invested into the crypto firms in quarter 1 of 2023 also marked a significant decline from the $13 billion it recorded in quarter 1 of 2022.
