Exploring Web3 Funding: Key Insights

 Between 2021 and 2022, the Web 3.0 investment landscape experienced explosive growth, with investments totaling an astounding $94 billion across various sectors. Much of this funding went into financial market infrastructure—what we colloquially know as DeFi (Decentralized Finance). Much of this activity was concentrated in 2021, as the influx of capital seemed limitless. However, by the end of 2022, the tide shifted, and funding saw a sharp decline of 78%, largely influenced by market events such as the collapse of FTX.



Despite this market correction, the appetite for Web 3 funding remains substantial. Investors and institutions continue to explore alternate opportunities as they look beyond traditional markets. This evolution reflects a broader trend in which the Web 2.0 actively seeks decentralized solutions and investments.


Web3 Funding Trends: 2021 to 2023

Over the past three years leading into early 2023, nearly 5,000 new Web 3 startups successfully raised capital. However, the fundraising environment has become notably more challenging.

  • In early 2022, Web3 ventures attracted approximately $16 billion in funding.
  • By early 2023, this figure dropped to $3.6 billion—a staggering 78% decline, according to a Crunchbase report.

This downward trend aligns with broader economic factors, including rising capital costs. Investors are increasingly shifting their focus to mature, stable companies over high-risk, early-stage ventures. This shift is not exclusive to Web 3 funding but mirrors trends in rapidly evolving sectors, such as artificial intelligence (AI).


Key Factors Impacting Web3 Funding

  1. Higher Capital Costs:
     The rising cost of capital has made fundraising more difficult for early-stage Web3 ventures.
  2. Investor Preferences:
     Top Web3 investors prioprioritizingity, stability, and sustainable growth over speculative opportunities.
  3. Market Maturation:
     As sectors like AI and Web3 mature, the focus has shifted from explosive, short-term growth to long-term viability and scalability.

This maturation phase marks an important step in the evolution of Web 3.0 investments. Sectors that successfully navigate these shifts often emerge stronger, with more sustainable strategies.


Strategies for Reviving Web3 Funding

  1. Focusing on Maturity and Stability

The Web 3.0 industry is transitioning from its initial, high-growth phase to a more measured and sustainable path. This shift is not a setback but a natural progression observed in all innovative sectors. The markets are self-correcting by filtering out less viable projects while favouring startups with proven concepts and tangible use cases.


2. Real Economy, Real Finance, Real Solutions

The future of Web3 ventures lies in their ability to deliver real-world solutions. 

With robust institutional backing and a more stable economic climate, 2024 could be a pivotal year for the sector. Startups demonstrating real-world utility and scalability will find it easier to secure Web 3 funding.

Key Enablers for Funding Recovery:

  • A stable economic environment enhances fundraising opportunities for startups.
  • Startups must adeptly navigate regulatory and economic challenges to sustain growth.
  • Institutional adoption and mainstream integration will fuel long-term viability.


Gaining Insights from the Achievements of Web 1.0 and Web 2.0

The evolution of Web3 startups mirrors the journeys of earlier web generations:

  • Web 1.0 revolurevolutionizedmation access.
  • Web 2.0 transformed social connectivity and user-generated content.


Similarly, Web 3.0 investments aim to redefine financial systems with enhanced security, transparency, and decent decentralization, as earned from past successes. Web3 ventures can focus on sustainable growth and overcome current challenges.

The emphasis is on fostering a robust ecosystem and prioritizing long-term development. Just as Web 1.0 and Web 2.0 changed the digital landscape, Web3 has the potential to transform financial transactions and create a more inclusive, decent decentralized system.


A Sustainable Path Forward for Web3

As the Web 3.0 sector matures, the focus shifts from rapid expansion to measured, strategic growth. By addressing regulatory challenges, attracting institutional support, and integrating into the real economy, Web3 ventures can achieve sustainable success.

The commitment to overcoming present-day hurdles will allow Web3 startups to thrive and replicate—or even surpass—the achievements of earlier web generations.


About Pivot


Founded by Anshul Dhir, a 3x founder in the Web3 space and a mentor and investor in over 50 Web3 ventures, Pivot is uniquely positioned to lead the new wave of Web 3 startups. Leading founders, Web3 investors, and industry players, including Polygon, Delphi Digital, Blockchain Founders Group, Liminal, Biconomy, BitsCrunch, Tegro, Router, QuickSwap, and many more support pivots. Tier 1 ecosystems such as BNB Chain, Polygon, Arbitrum, ICP, Manta Network, and Mantle actively collaborate with Pivot alongside top VCs, launchpads, and exchanges.

Pivot stands at the forefront of fostering innovation and driving Web 3.0 investments, helping ambitious founders turn visionary ideas into tangible successes.

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