“Web 3 is one area that investors have deployed a lot more money over the last six months,” Le said, including the metaverse, gaming and other blockchain-based technologies. During the third quarter of 2022, VCs invested an estimated $1.5 billion into Web3-based companies.
According to PitchBook’s latest report on third-quarter emerging technologies, by 2027 Web3-based content platforms will bring in an estimated $39 billion in revenue, versus the $3.4 billion in revenue that is expected to be earned by the end of 2022.
VC investing for “exchanges, custodial wallets, crypto on-ramps” and “a lot of centralized lending and borrowing services” fell by about 85%, he said, quoting the report. Le said while the decline is sharp, it’s “not surprising” considering the high-profile failures of many companies, including Celsius Network and BlockFi.
Le said the decline in VC funding was taking place “even before the FTX collapse.” The failed centralized exchange, based in the Bahamas, filed for bankruptcy protection last month, not long after a CoinDesk report revealed FTX’s corporate sibling, Alameda Research, was being propped up by FTX’s native token, FTT.
“You’re gonna really see a bifurcation,” he said. “You know, over the last 18 months everyone was investing in the crypto space, whether it’s crypto-native investors, hedge funds, crossover funds, family offices. You’re gonna see a lot of the non-crypto investors move away from this area.”
However, while venture funding will continue to decline into 2023, his company is “looking at some time in the second half of next year where venture investments will continue to increase. And we’re being cautiously optimistic here.”
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