Raising funds is one of the most difficult yet most crucial tasks for any startup that has just begun operations. For web3 startups, this challenge is made even tougher by the current state of the cryptocurrency market.
According to an analysis by BanklessTimes.com, web3 startup funding has seen a 92.7% decline since the last quarter of 2021. In the fourth quarter of 2021, web3 startups raised a total of $9.8 billion through various funding rounds. However, in the third quarter of this year, that number dropped to just $ 719.7 million.
BanklessTimes.com CEO says,
Crypto Market Downturn
One of the main reasons for this decline may be the bearish turn that the crypto market has taken since the beginning of the year. The price of Bitcoin, which is often seen as an indicator of the health of the crypto market, has dropped by more than 50% since January. This has made it difficult for web3 startups to raise money through initial coin offerings (ICOs) and other forms of cryptocurrency-based fundraising.
Another factor that may have contributed to the decline in web3 startup funding is the increasing regulatory scrutiny worldwide. In many jurisdictions, including the United States, regulators are taking a closer look at cryptocurrency-related projects and businesses. This has made some investors hesitant to put their money into web3 startups.
Unstoppable Domains Achieves Unicorn Status
Web3 startups face many challenges when it comes to fundraising. However, there have been some bright spots at the end of July. One of the most notable success stories is Unstoppable Domains, a blockchain startup that provides users with censorship-resistant domain names.
Unstoppable Domains announced it achieved unicorn status after raising $65 million in a Series B funding round led by Pantera Capital with participation from several angel investors. With this latest round of funding, Unstoppable Domains plans to expand its team and continue to build its censorship-resistant domain name system.
With the bearish turn of the crypto market and increasing regulatory scrutiny, it will be interesting to see how web3 startup funding trends develop over the rest of the year. If the crypto market can rebound and regulatory clarity is achieved, we may see more web3 startups attracting investment. However, if the current trends continue, web3 startups will need to find ways to adapt to the changing market conditions if they want to survive.
