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


Christian Horz/Shutterstock modified by Blockworks


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.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. What you can expect: And more! Don’t miss out on the opportunity to be in the room when the future of crypto is decided. Join us and help shape the future of our […]

recent research

Research report - cover graphics-2.jpg


Base has doubled-down on its commitment to the Superchain vision, has shown early signs of success with nearly $400M in TVL, and has become home to novel dapps such as friend.tech which has seen significant traction.


Blockchain is a “natural fit” in games based on open economies and user-generated content, says Wyatt


Their current stance is a half-baked attempt that could stifle innovation and burden an emerging industry


Maker’s DeFi-focused “subDAO” passed a proposal activating a lending market for DAI on the Gnosis Chain


Certain creditors could be repaid sooner, with one hedge fund exec telling Blockworks it expects a payout by the end of the year


Busan is South Korea’s second largest city with a population around 3.4 million


Cyprus granted eToro crypto registration, setting the groundwork for the company to operate crypto services post-MiCa rollout