What the numbers say: Venture capital (VC) funding to Web3 startups declined by 76% in Q2 compared to the same period last year. Web3 startups raised just over $1.8B in 322 deals during the second three-month period of 2023. The figure also represents a 51% drop in the number of deals. The latest decrease means that Web3-focused startups experienced a decline in funding for five consecutive quarters. Relevance: The plummet in the Web3 fundings was mainly triggered by the increased number of investors gravitating to AI and more traditional sectors following a prolonged winter in the crypto industry. However, despite a five-quarter drop, several VC firms have managed to raise promising funds over the last few weeks to invest in crypto and Web3 startups. Most recently, crypto-focused VC firm Polychain Capital announced that it secured $200M in funding. Web3 investment firm CoinFund similarly raised $158M in its latest fundraising round to invest in early-stage startups working on the intersection of crypto and AI. The firm initially planned to raise $125M in funding, but the round saw more interest than expected. Brands that should care: On the other hand, Q2 saw only three fundraising rounds securing more than $100M as opposed to 15 rounds in Q2 2022. The firms, which have managed to raise over $100M, were Switzerland-based crypto project Islamic Coin, Vancouver-based messaging protocol LayerZero Labs, and Worldcoin developer Tools For Humanity, with funds of $200M, $120M, and $115M, respectively. |
