It appears that worldwide web3 venture funding is on track to decline for the seventh consecutive quarter. While this may come as a surprise to many, the slowing demand for web3-based solutions has caused investors to pull back from providing capital for such endeavors.
In particular, the amount of venture capital invested in web3 startups has been steadily declining ever since the blockchain and cryptocurrency craze of 2017 and 2018. According to a recent report from tech news website The Block, venture funding for web3 startups has dropped to $390 million in Q1 2021, down 40% compared to the prior quarter and down 78% compared to Q1 2020.
The reason for this decline may be due to the fact that investors are becoming increasingly skeptical of blockchain and crypto projects. While the technology has great promise, many projects have failed to live up to their visionary promises and suffered from issues such as lack of traction, regulatory uncertainty, and prolonged technical development. In addition, the bear market of the past few years has left many investors weary of putting their money into volatile projects.
However, there may be some hope for the future of web3 venture funding. Despite the challenges, a number of web3 projects have made great progress and are now stable businesses with successful products. This progress has encouraged a select few investors to recognize the potential of web3 and reinvest in the space, though, for now, not at the rate of 2017 and 2018.
At the same time, an increasing number of institutional investors are showing interest in the web3 space as the technology matures and grows more secure. These investors can provide web3 startups with a much needed injection of capital to continue their growth.
Despite its recent woes, venture funding for web3 startups may still rebound in the coming quarters. For now, though, investors will be hesitant to provide capital to new or untested projects, preferring to wait and see how the sector matures before making any big bets.
