Even As Funding Dips, Top Web3 Investors Remain Active

A year ago, Web3 was one of the buzziest words in the tech ecosystem.

Much of that hype has died down a year later, but the biggest investors in the space have remained very active.

While overall funding in Web3 was down last year from 2021, several top investors in the space such as Shima Capital, Animoca Brands and Y Combinator saw their numbers tick up in 2022, according to Crunchbase data.

In fact, about a dozen investors made 40 or more deals in the Web3 space last year — and for most that was an increase from 2021.

Leading the way

Those numbers are similar when also looking at firms that led or co-led the most rounds last year. Polychain led the way last year with 30 rounds led or co-led — per Crunchbase — just a slight drop from the 32 rounds the firm did in 2021. Others such Pantera Capital and Animoca Brands actually upped their numbers from 2021, both leading or co-leading more than 20 rounds.

In terms of dollars, Andreessen Horowitz led the way. The firm — with a heavy interest in crypto — led or co-led more than two dozen rounds worth nearly $1.6 billion, according to Crunchbase. That topped the 29 rounds it led or co-led worth about $1.4 billion in 2021.

Other firms including Tiger Global, Temasek Holdings, Paradigm and SoftBank Vision Fund all led or co-led rounds that totaled more than $1 billion last year. Out of that group, only Tiger saw the value of the rounds it led or co-led drop from 2021.

Of course, not everyone saw their numbers jump in a space where funding dipped. Coatue led or co-led nine rounds in 2021 that totaled $2 billion. Its numbers fell to only three rounds worth $469 million last year.

Similarly, Sequoia Capital saw its numbers dip from leading or co-leading seven rounds worth $2.8 billion in 2021 to only one round worth $135 million last year.

A slow decline

While those numbers do paint a rather robust picture of the Web3 industry, it is important to note almost all those firms saw their investment cadence tick down as last year progressed.

That is not surprising, as Web3 as a whole saw its numbers decline throughout 2022.

Through the first 10 weeks of this year, no firm had yet announced 10 deals in the space and the current quarter is on pace to be the sector’s worst in years.

However, the sector has proven somewhat resilient as investors seem fearful of missing out on the promise of Web3 and decentralized financing. 

That is especially true for crypto. While Web3 has sputtered at times, Bitcoin just had its best week since 2019 in terms of price gain — increasing more than 25%. That’s despite massive bank-related upheaval, including crypto-focused Signature Bank being taken over by the FDIC.

With funding down across almost all sectors and the fallout from the Silicon Valley Bank failure still being sorted out, it’ll be interesting to see if Web3’s top investors continue their pace from previous years — or if the current gradual slowdown becomes a full stop.

Methodology

For Web3 funding numbers we analyze investments made into VC-backed startups in both cryptocurrency and blockchain.

Illustration: Dom Guzman

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