Startup funding is sometimes a lot like fashion. Some business plans are in vogue one season and out of style the next. Others show prolonged staying power.
In recent months, companies in the Web3 and broader crypto space are looking more like the first category. The FTX implosion, paired with steep declines in crypto asset prices, hasn’t killed investment, but it has dampened enthusiasm.
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Artificial intelligence, meanwhile, looks to be in the class of categories with real staying power, and growing buzz to boot. The smash hit launch of ChatGPT, along with the slow-and-steady creep of AI tech into more real-life use cases, has fixated the attention of the tech world, including investors.
So how does that translate into funding? We attempted to find out using a Crunchbase analysis of key terms that funded startups use to describe themselves. The analysis looked at quarterly investment in startups with description buzzwords 1 in two categories: artificial intelligence and Web3.2
We looked to see whether startups touting AI technology are seeing more investment lately than those with Web3-associated businesses.
The findings? So far in Q4, startups with AI-related buzzwords in their business descriptions are collectively seeing a quarter-over-quarter rise in funding. Investment in Web3 startups is down quarter over quarter.
For perspective, we chart out funding to AI- and Web3-related buzzword companies for the past six quarters below.
As you can see, funding to both categories is down sharply from peaks hit in Q4 2021 and Q1 2022. This comes amid a broader downturn in global startup funding, from which few sectors have been spared.
The divergence in pathways shows up more recently, in the Q4 totals. This ties in with current events, as FTX’s collapse became widely known in November, followed by associated ripple effects, including crypto lender BlockFi’s bankruptcy filing later in the month.
Illustration: Dom Guzman
Buzzwords used for the AI analysis include: AI, artificial intelligence, machine learning, deep learning, machine vision, NLP, natural language processing and neural networks. Buzzwords for the Web3 analysis include: Blockchain, crypto, cryptocurrency, Web3, NFT, non-fungible tokens, DAO, DeFi, and token.↩
Companies can have both AI- and Web 3-related buzzwords in their descriptions and, if they do, are included in both categories.↩
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