Crypto and Web3 Venture Funding Remain Stagnant Amid Bear Market Blues: October Insights

Crypto and Web3 Venture Funding Remain Stagnant Amid Bear Market Blues: October Insights

Crypto News – On October 2, industry analyst WuBlockchain released a comprehensive report on venture capital funding in the crypto sector for the month of September, based on RootData statistics. The findings reveal a persistent trend of sluggish investment activity in the crypto and Web3 startup space.

Crypto VC Funding Remains Stagnant

The number of new crypto investment projects saw a slight uptick compared to August, with 77 projects recorded in September, up from 75. However, this figure represents a substantial 44% decrease from the same period in 2022, when 138 projects successfully raised funds.

In terms of total funding raised, September witnessed a 24% decline, amounting to $510 million, compared to the $670 million reported in August. The majority of this funding was directed towards infrastructure projects, accounting for approximately 30% of the financing, followed by DeFi projects, constituting around 22%.

Notably, the most significant investment deal of the month was made by Bitmain, which announced a substantial exchange involving 27,000 S19J XP miners with bankrupt Core Scientific. This deal amounted to $231 million in cash and $539 million worth of Core Scientific common stock.

Other substantial funding rounds in the crypto venture space included Proof of Play ($33 million), Bastion ($25 million), Story Protocol ($25 million), and Supra ($24 million).

Despite a 25% increase in crypto funding reported by DeFiLlama in September compared to August figures, investments have seen a drastic 78% decrease from the same month in 2022, when investors infused a substantial $1.59 billion into the sector.

Web3 Funding Challenges

In parallel, the funding scenario for Web3 startups also reflects a downtrend. According to Crunchbase data, Web3 startups managed to secure $1.3 billion in funding during the third quarter, a significant drop from the approximately $2 billion raised in both Q1 and Q2 of the same year.

In a broader historical context, the average funding per quarter for Web3 startups remained remarkably high, surpassing $8 billion in every quarter from Q3 2021 to Q2 2022, as reported by TechCrunch.

Comparatively, the $4.5 billion raised by crypto startups in Q3 2022 was more than triple the funding raised in Q3 2023, indicating a substantial decline in investment.

While the trend depicts a challenging scenario for both Web3 and crypto venture funding, it’s essential to acknowledge that substantial sums are still being invested. Despite bear markets posing difficulties, experienced investors understand that markets are cyclical, and a turnaround is likely on the horizon.