Web3 VC Funding Hit Lowest Levels Since 2020

Deals slowed to 333 in the first quarter of 2023, down from 500 in the first quarter of 2022

article-image

Christian Horz/Shutterstock modified by Blockworks

share

Venture capital funding for Web3 startups has dried up, as deal flows slow. 

Data from Crunchbase shows that Web3 VC funding dropped 82% year-to-year from $9.1 billion to $1.7 billion. 

In the fourth quarter of 2020, there was $1.1 billion worth of VC funding. Despite the term Web3 being coined in 2014 by Ethereum co-founder Gavin Wood, there wasn’t a lot of reporting on the space until 2021.

When looking at Google Trends, there’s a clear spike in December of 2021, though interest had been building throughout 2021. 

Deal flow also declined, and Crunchbase’s Chris Metinko wrote “only 333 deals were completed in the first quarter — down from 369 in the previous quarter and a sharp drop from the more than 500 announced in Q1 2022.” Just like the total funding number, this is the lowest number of deals announced since the fourth quarter of 2020.

Out of over 300 hundred deals, only two “hit the nine-figure mark.” Those were Blockstream in January, which received $125 million from Kingsway Capital, a London-based firm, and Fulgur Ventures. 

Ledger, a crypto hardware maker, secured $108 million in a Series C round with investors from 10t, Morgan Creek Capital, Cathay Innovation, among others. 

On the other hand, Galaxy Digital found in a recent report that crypto startups saw a 20% increase in VC deals last quarter. The jump was mostly driven by pre-seed activity, though it notes that more deals didn’t mean more capital. 

Altogether, VC funding came in around $2.4 billion, which is the lowest amount since the fourth quarter of 2020.

However, “crypto and blockchain startups raised less than half the amount raised just two quarters ago,” Alex Thorn, head of firmware research at Galaxy, wrote in the report.

Overall, Galaxy’s findings line up with what Crunchbase found, which is that “venture funding is down in almost every sector.”

“Web3 no doubt has been more affected by the dip since in uncertain times investors seek out industries they know best — such as cybersecurity or SaaS, not the promise of the next iteration of the internet.” Metinko noted in the report.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

Sam Altman sees our future through the World Orb

article-image

Few US politicians are this clearheaded about Bitcoin

article-image

Pump.fun seemed to kick off buybacks on Tuesday according to onchain analysis

article-image

Stablecoins are a new form of money, with an old kind of limit

article-image

Firedancer has yet to go fully live, but its progress has been “pretty impressive,” a dev said

article-image

House lawmakers support, criticize the GENIUS Act, CLARITY Act and the Anti-CBDC Surveillance Act in Monday hearing