Blockchain Doubles, Ant Exits, While Web3 Funding Continues to Decline

Editor’s note: For more information about Web3, visit Crunchbase Web3 Trackerwhere we track startups, investors and funding news in the Web3, cryptocurrency and blockchain space, powered by CrunchbaseThis is complete, real-time data.

Monday’s cryptocurrency and blockchain news pretty much encapsulates the industry as of late: one step forward, then a quick step back.

Based in San Francisco Blockchain capital — whose portfolio includes CoinBase, Kraken AND Circle – announced the closing of two new funds – the sixth early stage fund and the first opportunity fund – for a total of $580 million.

That news opposed Bloomberg relationship that Chinese fintech giant Group of ants he intended to retire Capital A&T $100 million fund as the digital asset market remains turbulent at best. The early growth stage venture fund is an investor in startups such as Digital Assets Platform Matrixport and custodian of digital assets Cobo.

These two contradictory moves by notable names come as venture capital funding to startups in the cryptocurrency and blockchain — or Web3 — space has plummeted to its lowest levels in years, according to Crunchbase data.

Decline in funding

With less than two weeks left in the third quarter, Web3 funding to VC-backed startups is likely to hit its lowest total since 2019, Crunchbase the data shows. Industry startups have seen less than $1 billion invested in the sector in fewer than 200 deals so far this quarter.

This is in contrast to nearly double that amount of money – $1.9 billion – in 364 deals last quarter. It also represents a decline of approximately 75% compared to the third quarter of 2022, which saw approximately $3.6 billion invested in more than 500 deals.

A good indicator of the current investment slowdown in the sector is the dearth of large rounds in the cryptocurrency and blockchain sector this quarter so far. There were only two rounds of $100 million or more in the third quarter: Palo Alto, California-based cryptocurrency custodian BitGo and India-based security company Web3 Zyber 365 both raised $100 million in rounds.

The decline can be attributed to several factors, including the collapse of several cryptocurrency exchanges last year, led by FTXof implosion: a more restrictive regulatory environment and VC turning their attention to other technologies such as generative artificial intelligence.

These factors, along with a general cooling of venture capital spending, have led to a challenging environment for funding in the cryptocurrency and blockchain space.

Watching a large fintech player like Ant exit the sector is unlikely to boost investor confidence in the market, yet some remain undeterred.

“Over the past 20 months we have invested more capital in the next generation of innovators than at any time in our history,” Blockchain Capital wrote in a blog announcing the two new funds. “The reason is simple: today’s market offers unprecedented opportunities, driven by an influx of highly skilled founders who are developing a wide range of innovative technologies.”

That innovative technology will need funding, something that seems to be in short supply for crypto and blockchain startups these days.

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Illustration: Dom Guzman

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