VC funding into Web3 start-ups down 82% year-over-year: Crunchbase
According to data from Crunchbase, venture capital (VC) funding into Web3 start-ups tanked 82% year-over-year (YoY), declining from $9.1 billion in Q1 2022 to $1.7 billion in Q1 2023.
Crunchbase News highlighted the data in an April 20 report, noting that the $1.7 billion figure for Q1 2023 also marks the lowest amount of Web3 start-up funding since the $1.1 billion posted in Q4 2020 — a time in which “many people had never heard of Web3.”
In this context, Web3 startups are defined as early-stage companies that are either working directly with crypto or blockchain tech (or both).
Deal flow, or the number of total deals between VCs and Web3 startups, also saw a significant drop with the 333 deals recorded in Q1 2023 marking a YoY decline of roughly 33%.
Additionally, the report highlights that the number of big Web3 start-up funding rounds hitting nine figures almost completely dried up over the past year.
“In Q1 2022, VC-backed startups raised 29 rounds of more than $100 million. That included massive raises of $400 million or more by ConsenSys and Polygon Technology, as well as — of course — FTX and its U.S. affiliate FTX US,” the report reads, adding that:
While the business information platform acknowledged that interest in Web3 start-ups has cooled of late, it also emphasized that “venture funding is down in almost every sector.”
The current state of venture capital in six charts: Source: Crunchbase pic.twitter.com/r2WwPC8cRD
Crunchbase attributed much of the decline in Web3 funding to investors opting for a risk-off approach over the past few months by seeking out opportunities in "industries they know best — such as cybersecurity or SaaS, not the promise of the next iteration of the internet [Web3].”
“However, there
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