In an intriguing twist of events, a recent report from Crunchbase has shown a considerable dip in the funding of Web3 startups from Venture Capital (VC) funds. Figures from the second quarter show a sharp 76% drop compared to the same time the previous year. Furthermore, when comparing the first half of the year to that in 2022, we find that Web3 startups banked almost $16 billion then, however, this year’s tally stands at a meager $3.6 billion, indicating a significant 78% downturn.
Now, Web3 in this context broadly encompasses cryptocurrency and blockchain startups which have borne the brunt of the current crypto chill. The Crunchbase report indicates an overall slowdown in VC funding, manifesting a somewhat distressing 18% drop across all sectors in the second quarter of the year. However, the plunge in crypto-related funding is noticeably more severe.
Contrasting this fall, AI start-ups are basking in the shine of investors’ attention, raking in an impressive $25 billion in funding in the first half of the year. Amidst the decline, a few remarkable funding bulletins have been recorded in H1 2023. The CEO of OpenAI, Sam Altman, had a successful fundraising journey with his crypto project Worldcoin, bringing in $115 million in a Series C round in May 2023, propelled by Blockchain Capital.
Another noteworthy summoning of funds was orchestrated by crypto protocol LayerZero who deployed a bounty of $120 million, with the backing of Andreessen Horowitz (a16z), Christie’s, and others. Despite the downturn, firms like a16z are waving a positive flag for the future of Web3. The “State of Crypto” report from the firm lauded the resilience of the Web3 gaming sector as particularly encouraging.
Back in June, there was another successful round of fundraising for Mythical Games, which had just announced that their NFL Rivals app had surpassed 1 million downloads. Additionally, Binance Labs, the venture capital appendage of Binance, maintains an optimistic vantage point on the Web3 terrain, expressing an eagerness to fund companies that will be instrumental in transitioning from Web2 to Web3, especially in the gaming industry.
In overview, this snapshot of the market offers both challenges and opportunities. It casts light on the ebbs and flows of investor interest and charts the unsteady journey of the promise and appeal of Web3 and digital currency. However, the ray of hope shines through, by way of firms and initiatives that continue to invest and believe in the potential of Web3.
Source: Coindesk
