In the first quarter of the year, funding to VC-backed Web3 startups hit its lowest point since the very early days of the space as deal flow continues to slow.
According to Crunchbase data, venture capital fell 82% year over year, from $9.1 billion in Q1 2022 to only $1.7 billion.
The funding number is also down 30% from the final quarter of last year and is at its lowest level since the fourth quarter of 2020, when Web3 was relatively unknown and only $1.1 billion was raised.
Only 333 agreements were finalized in the first quarter, down from 369 the previous quarter and significantly less than the more than 500 announced in Q1 2022. Deal flow also continued to noticeably decline. Since Q4 2020, the total number of transactions has decreased.
According to Crunchbase, a large portion of the fall in Web3 investment was caused by investors choosing a risk-off strategy during the past few months and looking for possibilities in “industries they know best, like cybersecurity or SaaS”.
“Undoubtedly the industry is still reeling from the dramatic collapse of FTX, as well as several other crypto lenders, and even some of the banking issues that rattled the economy in general.”
