VC Financing For Web3 Hits Its Lowest Level This Quarter

Key Points:

• In the first quarter of this year, venture capital-backed Web3 firms received the least amount of money.
• Venture capital fell 82% year on year, from $9.1 billion in Q1 2022 to $1.7 billion in Q1 2023.
• Transaction flow also continued to decline, with just 333 transactions executed in the first quarter.

According to Crunchbase, financing to venture capital-backed Web3 companies fell to its lowest level since the space’s early days in the first quarter of the year as transaction activity slowed.

Crunchbase showed that VC financing for Web3 startups fell 82% year on year (YoY), from $9.1 billion in Q1 2022 to $1.7 billion in Q1 2023.

According to statistics from an April 20 report, the $1.7 billion number for Q1 2023 is also the lowest amount of Web3 start-up investment since the $1.1 billion announced in Q4 2020, when many people had never heard of Web3.

Transaction volume also continued to decline, with just 333 agreements finalized in the first quarter, down from 369 in the previous quarter and a significant decrease from the more than 500 announced in Q1 2022. Web3 startups are now classified as early-stage enterprises that operate directly with crypto or blockchain technology.

In the first quarter of 2022, 29 VC-backed firms received more than $100 million in funding. ConsenSys and Polygon Technologies both raised $400 million or more in total.

Moreover, the research states that the number of large Web3 start-up fundraising rounds in the nine figures has almost totally dried up over the last year.

Deal flow, or the total number of transactions between VCs and Web3 companies, also decreased significantly, with 333 transactions reported in Q1 2023, representing a 33% YoY decrease.

Blockstream, Ledger, and Chain Reaction are among the most important rounds of the quarter.

Although the business information portal noted that interest in Web3 startups has recently dropped, it also said that venture financing is down in practically every area. Despite turbulent economic circumstances, Bitcoin and Ether showed incredible resilience in the fourth quarter, with prices rising by more than 80% and 70% since the beginning of the year.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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