Venture Capital (VC) funding hasn’t been drying up for companies working on Web3, according to a senior analyst at data and research firm PitchBook, who revealed that Web3 companies have, in fact, seen funding rise. during the crypto winter.

According to Robert Le, a senior merger research analyst at PitchBook, VC funding has moved away from centralized cryptocurrency services towards decentralized platforms. Le’s words came during an interview on CoinDesk TV, in which he said:

Web 3 is an area where investors have invested a lot more money in the last six months.

The area includes blockchain-based technologies such as Metaverse, play-to-win and play-to-own games, and more. During the third quarter of the year, the news outlet reports, venture capitalists invested approximately $1.5 billion in Web3 companies.

Web3 is a term first coined by Ethereum co-founder Gavin Wood as a solution to a problem felt when the smart contract platform was first released: that the Web requires a lot of trust to function. Since then, the term has been used to describe a trustless, more decentralized and permissionless World Wide Web that takes power from the tech giants and gives it to users in the form of ownership.

According to PtichBook, by 2027 Web3-based content platforms are estimated to generate $39 billion in revenue, compared to $3.4 billion expected to be earned by the end of this year.

He added that there has been a move away from centralized VC services, which were investing in exchanges, custodial wallets and crypto onramps. These investments, he said, fell about 85% in a sharp but “not surprising” drop given the bankruptcies of several centralized companies this year, including Celsius Network and BlockFi.

According to the analyst, the drop in VC funding for centralized platforms was taking place even before the FTX collapse. Looking ahead, he said that he sees 2 non-crypto investors exiting the space and predicted a decline in 2023.

You know, over the last 18 months, everyone has invested in the crypto space, whether it’s crypto-native investors, hedge funds, cross-funds, family offices. You will see a lot of non-crypto investors steer clear of this area.

Although venture funding is expected to continue to decline through 2023, a PitchBook report suggests that venture investments may start to rise again in the second half of next year.

The report also predicts that there will be an increase in disclosures from crypto platforms and the possibility of regulatory clarity in the same time frame, which could give crypto investors more confidence in the market.

image credit

Featured image via Pixabay