Apr 22, 2023
VC Funding for Web3 Start-Ups Plummets 82% YoY
Venture capital (VC) funding into Web3 start-ups has seen a dramatic decline in the past year, according to data from Crunchbase. The report, released on April 20, reveals that the $9.1 billion invested in Q1 2022 has tanked 82% year-over-year (YoY) to a mere $1.7 billion in Q1 2023 — the lowest amount of Web3 start-up funding since the $1.1 billion posted in Q4 2020.
The report also highlighted that the number of deals between VCs and Web3 startups has dropped by 33%, with a total of 333 deals recorded in Q1 2023. Moreover, the report noted that the number of big Web3 start-up funding rounds hitting nine figures almost completely dried up over the past year.
The report attributed the decline in Web3 funding to investors opting for a risk-off approach by seeking out opportunities in industries they know best, such as cybersecurity or SaaS. Despite the current state of Web3 funding, the report highlighted the significant price rallies of Bitcoin (BTC) and Ether (ETH) since the start of the year as a positive sign for the industry.
In a separate report published by Galaxy Research on April 11, the firm looked at the broader amount of VC investment into all crypto companies over the past 12 months. The report indicated that the $2.4 billion invested into all crypto firms in Q1 2023 marked an 80% decline from the $13 billion recorded in Q1 2022.
On the bright side, the report noted that the number of VC crypto deals had increased by around 20% in Q1 2023 compared to Q4 2022. Whether or not this increase in deal flow will be enough to bring more venture dollars back to the space — only time will tell.
With the current dip in Web3 funding, many companies are turning to NFT marketing and promotion as a way to generate revenue. NFTs (non-fungible tokens) are digital assets that are unique and can be used to represent anything from art, music, and collectibles to real estate and even stocks.
As such, NFTs are becoming increasingly popular as a way to promote products, services, and brands. Companies are leveraging Twitter NFT marketing and working with NFT marketing agencies to create unique promotional campaigns. Additionally, many companies are now selling NFTs as a way to generate revenue.
Overall, the Web3 space has seen a significant decline in funding over the past year. However, the increase in NFT marketing and promotion, as well as the rise in crypto prices, may offer some hope for the industry. Only time will tell if venture dollars will return to the Web3 space.
Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.
