Investment in Web3 startups dropped 82% YoY in Q1 2023, falling to $1.7bn from $9.1bn in Q1 2022, according to a report from Crunchbase. The firm, which noted that venture funding was down in almost every sector, said that the $1.7bn was the lowest amount of investment for Web3 since Q4 2020 when “many people had never heard of Web3”. Venture capital deal flow between VCs and Web3 firms also slid 33% YoY. The report suggested that the reason for the drop was that over the past six months, investors had chosen to take a risk-off strategy and look at industries that they were familiar with, such as cybersecurity or software as a service, rather than the promise of Web3. However, the report said that there were some positive signs, such as the increase in value of Bitcoin and Ether, adding that “only time will tell whether that’s enough to bring more venture dollars back to the space”.
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