Funding for Web3 in 2023 fell sharply

Web3 startup investments dropped by 74% in 2023, totaling less than $7 billion from 1,564 deals (Crunchbase). This is a significant decrease compared to the previous year, which saw $26.6 billion invested across 2,891 deals.

This is the lowest level of investment since 2020, marking a sharp decline in investor interest in the sector.

In the fourth quarter of 2023, only $1.1 billion was raised in 221 deals, down 21% from the third quarter and 65% from the same period in 2022. During the year, only eight Web3 startups were able to raise $100 million or more in funding, a significant drop from 118 such rounds in 2022.

Bitcoin has recovered significantly and regulatory developments, like the SEC’s approval of spot bitcoin ETFs from 11 companies, suggest a potential return of interest in the sector, despite the overall downturn.

However, investor interest is shifting to AI, leaving Web3 facing the challenges of reduced funding and increased scrutiny.