Venture capital funding for crypto and web3 startups continues to dwindle amidst the prolonged bear market. The latest report on VC funding in September provides little surprise, showing minimal changes from the previous month.
On October 2nd, industry analyst WuBlockchain published its September report on venture capital funding within the crypto sector. Utilizing RootData statistics, the report identified a total of 77 publicly announced investment projects for the month.
Crypto VC Funding Remains Stagnant
The number of crypto investment projects in September was slightly higher than in August, totaling 77 compared to the previous month’s 75. However, this figure is down by a substantial 44% from September 2022 when 138 projects successfully raised funds.
The total funding raised in September amounted to $510 million, marking a 24% decrease when compared to August, which saw $670 million in investments.
Infrastructure projects took the lead, accounting for approximately 30% of the financing in September. DeFi (Decentralized Finance) projects came in as the second-highest category, making up around 22% of the total.
The most significant investment deal of the month involved Bitmain, which announced its plan to supply 27,000 S19J XP miners to the bankrupt Core Scientific in exchange for $231 million in cash and $539 million worth of Core Scientific common stock.
Other noteworthy crypto venture funding rounds included Proof of Play ($33 million), Bastion ($25 million), Story Protocol ($25 million), and Supra ($24 million).
According to DeFiLlama, crypto funding increased to $353 million in September, showing a 25% uptick from August figures. Nonetheless, these investments remain 78% lower compared to the same month in 2022 when investors poured $1.59 billion into the sector.
Web3 Funding Challenges
Web3 startups faced a funding slump in the third quarter, with Crunchbase reporting a total of $1.3 billion raised—down from approximately $2 billion each in Q1 and Q2.
TechCrunch reported that between Q3 2021 and Q2 2022, Web3 startups consistently raised over $8 billion each quarter on average. In contrast, the $4.5 billion raised by crypto startups in Q3 2022 significantly outweighed the Q3 2023 figures, which were just a fraction of that amount.
While the trend shows a decline in both Web3 and crypto venture funding, substantial sums are still being invested. Bear markets are often seen as an opportunity for strategic investors to build and position themselves for future growth.