Web3 Funding from Venture Capital Firms Register 78 Percent Dip From Last Year: Crunchbase

Between April and June this year, a total of 322 deals were finalised between Web3 projects and investment capitalists.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 19 July 2023 13:45 IST

Web3 Funding from Venture Capital Firms Register 78 Percent Dip From Last Year: Crunchbase

Photo Credit: Unsplash/ Viacheslav Bublyk

Between April and June 2022, Web3 startups had managed to raise $7.5 billion

Highlights

Crypto, NFT, Metaverse firms, all fall under Web3 category
Sound, Olympix are two Web3 firms to receive millions in fresh funding
AI is attracting venture capitalists

The funding into the Web3 ecosystem has dropped significantly between June 2022 and June 2023. In the first half of last year, projects and startups related to Web3 had managed to raise $16 billion (roughly Rs. 1,31,404 crore) in funding. On the other hand, up until June this year, only $3.6 billion (roughly Rs. 29,568 crore) have been invested by venture capital firms in Web3 initiatives. This marks a decline in funding by 78 percent in the benefit of the digital assets sector, as per a Crunchbase report.

Companies that are engaged in activities related to cryptocurrencies, non-fungible tokens (NFTs), metaverse, as well as blockchain gaming — all fall under the umbrella of the Web3 categorisation. In the lack of regularity clarity, several promising Web3 projects rely heavily on securing external fundings to launch their operations.

Between April and June this year, a total of 322 deals were finalised between Web3 projects and investment capitalists. Collectively, these deals have managed to garner $1.8 billion (roughly Rs. 14,782 crore).

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On the contrary, between April and June 2022, Web3 startups had managed to raise $7.5 billion (roughly Rs. 61,585 crore), the Crunchbase report said.

“While seemingly all sectors are seeing a slowdown in venture capital, Web3 — defined here as cryptocurrency and blockchain startups — has been hit hardest. In fact, deal flow hit its slowest pace since the final quarter of 2020, when only 291 deals were announced for a total of $1.1 billion (roughly Rs. seven crore). Large rounds definitely played a role in the dramatic year-to-year drop Web3 funding witnessed,” the report noted.

While the digital assets sector remains grappled with market volatility as well as lack of regularity clarity — the attention of venture capital firms has shifted to other tech spheres.

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Companies working in the field of Artificial Intelligence (AI) have attracted the attention of venture capital firms lately.

“However, there is no denying the massive collapses of large crypto exchanges — we all know the names — and recent regulatory actions in the US likely have shaken some investors from looking into the digital asset space. Will those investors come back, or will current investors invite more? The numbers certainly aren't trending that way. Now investors seem very wary of putting money into anything — except, of course, AI,” the Crunchbase report noted.

Most recently, music NFT startup ‘Sound', and Web3/AI firm Olympix managed to bag millions in funding.

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Further reading: Cryptocurrency, VC Funding, Web3, Crypto, Crunchbase

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More