Web3 venture funding plummeted in the first quarter of 2023, down 80% from the same period a year earlier, according to data from K33 Research.
The figures correspond with data from The Block Pro, which show that $13.5 billion was invested by VCs in the first quarter of 2022 compared with only $2.8 billion in the first quarter of this year. That's a 79% drop.
Anders Helseth of K33 Research said there could be additional declines.
"If we look at web3 and crypto in total, there was $15 billion invested by VCs in the first half of 2022. But, in Q1 and Q2 of this year, the figure is estimated at about $4 billion, and it could dwindle further,” he said.
Projections for the rest of 2023
Projections from The Block Pro were more optimistic and forecasted $12 billion in investment across 1,876 blockchain deals for the entirety of 2023. That would be a 64% decrease from the previous year in funding and a 24% decline in the number of deals.
There was $33.2 billion worth of blockchain venture funding and 2,453 deals in 2022, according to The Block Pro.
Funding decline
Helseth noted there were two types of projects that received significant funding in 2022 including Ethereum alternative layer one protocols, like Avalanche Cardano and Solana, and those related to NFTs and the metaverse.
“VCs have lost confidence in investment in layer one alternatives to Ethereum and projects based around the NFT and Metaverse sector,” he stated.
“The drop in Web3 funding is not an imminent threat to web3 services being built in the coming years, but like all projects, the coffers must refill before they run dry,” a K33 report stated.
Geoff Kendrick, Head of Digital Asset Research at Standard Chartered, stated that due to the bullish setup of cryptocurrencies, Bitcoin's price could still more than double this year. Kendrick reaffirmed the company's price target of $150,000 during an interview with BNN Bloomberg last week, indicating a 127% increase in Bitcoin by the end of this year.
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