Venture capital (VC) funding for Web3 start-ups has dropped to its lowest level in 82% year-over-year (YoY), according to data from Crunchbase. This has resulted in a significant loss for the company, which recorded $9.1 billion in the first quarter of 2022, but only $1.7 billion in the first quarter of 2023.
On April 20, Crunchbase News published an article highlighting the latest statistics on start-up investments in the Web3 sector. The report noted that in Q1 2023, only $1.7 billion was invested in Web3 start-ups, which is the lowest amount recorded since Q4 2020. During that period, when “many people had never heard of Web3,” the investment figure was $1.1 billion.
In the first quarter of 2022, there were nearly 500 deals announced, but there has been a significant decline in the first quarter of this year, with only 333 deals completed. As of now, companies operating in the Web 3 sector that directly deal with blockchain technology or cryptocurrencies are considered to be at an early stage of development.
As per Nate O’Brien’s recent tweet, the company has been witnessing a decline in almost every quarter since 2021, signaling a cooling interest in Web3 startup businesses. This revelation highlights the fact that there is a need for companies operating in the Web3 sector to adapt to the changing market conditions to stay relevant and competitive.
It also suggests that investors are becoming increasingly cautious and selective in their investments, and only those startups with a strong value proposition and growth potential are likely to receive funding.
According to the business news website, venture capital funding has declined overall, but it has been particularly noticeable for Web3 businesses. Despite the uncertain economic climate, Bitcoin and Ether have demonstrated remarkable resilience in the fourth quarter, with their values increasing by over 80% and 70% respectively since the beginning of the year.
This indicates that despite the challenges faced by the industry, there is still significant potential for growth and profitability in the cryptocurrency market. Investors should exercise caution, however, and conduct thorough due diligence before making investment decisions in this highly volatile and rapidly evolving industry.
