Web3 Fundraising Analysis for the Third Quarter of 2023: A Look into Emerging Trends and Techniques
In Brief
This report dives into the key trends affecting the AI, cryptocurrency, and web3 sectors, pinpointing the most important industries and players during Q3 2023.
As the cryptocurrency market continues to face a prolonged downturn, its effects are becoming increasingly clear within the fundraising arena. This downtrend, which has been in play since early 2022, continued through Q3 2023.
In this quarter, we saw unprecedented lows in both total investments and transaction counts, levels we haven’t encountered since the fourth quarter of 2020. The total amount raised during this quarter was just under $2.1 billion, dispersed over 297 transactions. This reflects a significant 36% drop in both investment amounts and deal activity compared to the previous quarter.
Metaverse Post is excited to present the Web3 Fundraising Analysis for the third quarter of 2023. In this report, we examine the most recent trends in AI, cryptocurrency, and web3 while identifying standout industries and key players of this quarter.
Examining the Fundraising & Investment Landscape in Q3
An analysis of the fundraising efforts in Q3 reveals a strong focus on early-stage investments. Seed funding emerged as the leading category, attracting a remarkable $488 million across 98 rounds.
This significant shift toward earlier-stage funding has grown steadily over the past three years, while funding for later-stage projects has noticeably declined.
The early-stage investment category, which includes Pre-Seed, Seed, and Series A rounds, has steadily increased its share from 37% in Q4 2020 to an impressive 48% by Q3 2023. Meanwhile, the share of later-stage deals, typically represented by Series B or later rounds, has seen a sharp decline from 8% in Q4 2020 to only 1.4% in Q3 2023.
This strategic pivot reflects the realities of the bear market, as investors now prioritize projects that promise the possibility of significant asymmetric returns, positioned to yield substantial profits when the market mood eventually improves.
Market Category: Web3
Total: 62 projects raising a total of $406,250,000
Top 10 Projects by Funding
| Project | Round | Date | Amount | Sector | Website |
| Story Protocol | Unknown | 9/6/2023 | $54,000,000 | Intellectual property | https://www.storyprotocol.xyz/ |
| Futureverse | Series A | 7/18/2023 | $54,000,000 | AI, Metaverse | https://www.futureverse.com/ |
| Cosmic Wire | Seed | 7/19/2023 | $30,000,000 | Metaverse | https://www.cosmicwire.com/ |
| Zeebu | Private Token Sale | 9/7/2023 | $25,000,000 | Telecom | https://www.zeebu.com/ |
| Jada Ai | Unknown | 8/17/2023 | $25,000,000 | AI | https://jada-ai.com/ |
| Sound.xyz | Series A | 7/12/2023 | $20,000,000 | Tooling, Music | https://www.sound.xyz/ |
| Pahdo Labs | Series A | 9/11/2023 | $15,000,000 | Gaming | https://www.pahdolabs.com/ |
| Xterio | Strategic | 7/12/2023 | $15,000,000 | Gaming | https://xter.io/ |
| Anytype | Unknown | 8/23/2023 | $13,400,000 | Data, Privacy | https://anytype.io/ |
| ZTX | Seed | 8/15/2023 | $13,000,000 | Metaverse | https://ztx.io/ |
Understanding the Web3 Project Landscape
1. Total Projects and Funding:
- Total Projects: 62
- Total Funding: $406,250,000
2. Top 10 Projects by Funding:
- Highest Funded Projects: “ Story Protocol ” and “ Futureverse Two standout projects each secured $54 million in funding. Interestingly, they cater to different niches within the Web3 ecosystem: one is dedicated to intellectual property, while the other focuses on AI and the metaverse.
- Varied Focus Areas: The leading ten projects encompass a wide array of fields, such as Intellectual Property, AI, Metaverse, Telecom, Tooling, Music, Gaming, Data, and Privacy.
- Total Funding for Leading Projects: The combined total for these top ten projects sums up to $264.4 million.
3. Implications and Observations:
- During Q3 2023, the leading ten projects contributed significantly, making up 65.08% ($264.4 million out of $406.25 million) of the total funds raised in the Web3 sector. This indicates a strong concentration of funding within these top projects.
- The Metaverse has emerged as a dominant theme, with significant investor interest reflected in several of the top ten projects.
- Considerable resources were directed towards AI and gaming, illustrating the ongoing shifts in the Web3 landscape.
In Q3 2023, the Web3 sector attracted an impressive $406.25 million across 62 projects. While the top ten projects captured the bulk of this funding, there's also a clear diversity of interest across the board.
Interest spanned various sub-domains of Web3, including AI, Metaverse, Gaming, and Intellectual Property.
The strong financial backing for these leading proposals demonstrates investors’ confidence in the promising future of Web3 technologies and their potential transformative effects in the coming years.
Web3 Sub-category Breakdown
| Sub-Category | Number of Projects | Total Funding | Top Project | Its Funding | % of Total Investment |
| Gaming | 9 | $56,900,000 | Pahdo Labs | $15,000,000 | 14% |
| Trading | 1 | $1,200,000 | Banana Gun | $1,200,000 | 0% |
| Wallet | 2 | $9,000,000 | Xverse | $5,000,000 | 2% |
| Investment | 1 | $1,900,000 | Nestcoin | $1,900,000 | 0% |
| Payment | 1 | $4,500,000 | Parallax | $4,500,000 | 1% |
| Metaverse | 7 | $103,000,000 | Futureverse | $54,000,000 | 25% |
| Music | 1 | $20,000,000 | Sound.xyz | $20,000,000 | 5% |
| AI | 6 | $36,100,000 | Jada Ai | $25,000,000 | 9% |
| Intellectual property | 1 | $54,000,000 | Story Protocol | $54,000,000 | 13% |
| Data | 8 | $32,000,000 | Anytype | $13,400,000 | 8% |
| Telecom | 1 | $25,000,000 | Zeebu | $25,000,000 | 6% |
| Security | 3 | $23,400,000 | Cube3 | $8,200,000 | 6% |
| Social network | 2 | $5,400,000 | Pop Social | $4,000,000 | 1% |
Intellectual Property
In the Intellectual Property realm, Story Protocol was able to secure an impressive $54 million during Q3 2023. Although specific details of the funding round are currently unavailable, Story Protocol’s emphasis on intellectual property is clear. Such a sizable investment hints at the exciting opportunities that lie ahead in this field.
AI
Futureverse , a visionary project connecting AI and the Metaverse, made headlines with a Series A funding round on July 18, 2023, garnering $54 million in investment. The significant financial injection into Futureverse highlights the mounting interest in these innovative technologies.
Jada Ai , a key participant in the AI sector, also achieved a noteworthy funding of $25 million during Q3 2023, although specific details about this funding round are not yet released.
Metaverse
In the Metaverse sector, Cosmic Wire kicked off its journey with a Seed round on July 19, 2023, successfully raising $30 million. The substantial backing for Cosmic Wire emphasizes the allure of this promising sector.
Likewise, ZTX also raised $13,000,000 in a Seed round on August 15, 2023.
Telecom
Zeebu , a B2B cryptocurrency firm focused on Telecom, executed a Private Token Sale on September 7, 2023, achieving a remarkable $25 million in funding. The company’s Telecom focus combined with this impressive investment points to significant potential in this niche.
Music
Sound.xyz , a project merging Web3 tools and music, accomplished a successful Series A round on July 12, 2023, securing $20 million. Sound.xyz’s focus on tools and music within the Web3 space is strongly highlighted by this substantial funding.
Gaming
Pahdo Labs , a major player in the Gaming sector, raised $15 million in a Series A funding round on September 11, 2023. The increasing prominence of gaming within the Web3 landscape is evident with Pahdo Labs’ significant investment.
Xterio , another rising star in the Gaming field, obtained $15 million in strategic funding on July 12, 2023. Xterio is aiming to sharpen its efforts in Web3 gaming with this considerable infusion of capital.
Data and Privacy
Data and Privacy Web3 company Anytype acquired $13.4 million in funding during Q3 2023, with specific details of this funding round remaining undisclosed.
The financial ecosystem surrounding Web3 is as diverse as it is innovative. While the metaverse and intellectual property often steal the spotlight, sectors such as gaming, AI, and data are emerging as key players as well. The data paints a clear picture: Web3 is expansive, diverse, and certainly here to stay.
Market Category: NFTs
Total: 12 projects raised a total of $57,246,770
| Project | Amount | Sub-Category | % of Total Investment |
| Mocaverse | $20,000,000 | Metaverse | 35% |
| Solv Protocol | $6,000,000 | DeFi – NFTs | 10% |
| Gondi | $5,350,000 | Lending/Borrowing | 9% |
| fxhash | $5,000,000 | Art, Marketplace | 9% |
| TRLAB | $5,000,000 | Marketplace | 9% |
| Get Protocol | $4,500,000 | Entertainment, Ticketing | 8% |
| FirstMate | $3,750,000 | Marketplace, Tooling | 7% |
| Drip Labs, Inc. | $3,000,000 | Rewards | 5% |
| Podium | $2,146,770 | Analytics | 4% |
| Salvo | $1,500,000 | Gaming | 3% |
| Moonbox | $1,000,000 | AI, Intellectual property | 2% |
As excitement around Non-Fungible Tokens (NFTs) continues to grow, it's essential to understand the investment landscape within this sector. Notably, NFT initiatives have attracted a sizable influx of funds, totaling $57,246,770 across 12 promising projects.
Leading Projects in NFTs:
- Mocaverse ($20 Million, 35%): Within the metaverse sub-category, Mocaverse captured a significant portion of NFT investments.
- Solv Protocol ($6 Million, 10%): Entering the intersection of DeFi and NFTs, Solv Protocol secured a noteworthy amount.
- Gondi ($5.35 Million, 9%): With a focus on lending and borrowing, Gondi highlights a broader segment of the NFT ecosystem.
- Marketplaces: Projects like fxhash ($5 Million, Art and Marketplace) and TRLAB ($5 Million) show the burgeoning growth of platforms that empower NFT trading.
The NFT domain encompasses a broad range of uses, including metaverses, marketplaces, analytics, and entertainment. With total investment nearing $60 million, the NFT landscape is merely beginning to reveal its vast potential.
The assortment of projects and their associated funding underscores the fact that the NFT ecosystem transcends digital art, representing a rapidly evolving landscape of digital ownership and innovation.
Notable Investors of Q3 2023
Several notable investors have exhibited great interest by taking part in various fundraising endeavors. Here are some key players and their contributions to the Web3 ecosystem throughout Q3 2023:
- Cogitent Ventures and Polygon : Cogitent Ventures and Polygon both stood out as engaged investors in the Web3 scene, each involved in four different fundraising initiatives. Their diverse investments demonstrate a commitment to fostering innovation within the Web3 sphere.
- AllianceDAO , Andreessen Horowitz , Base Ecosystem Fund , Binance Labs , Collab+Currency , Foresight Ventures , Hashed , Hashkey Capital , NGC Ventures , Robot Ventures , and Shima Capital : These investors each participated in three fundraising rounds within the Web3 sector during Q3 2023. Their collective backing illustrates the vibrancy and growth potential of this exciting sector.
Prominent NFT Projects Investors
In the flourishing domain of Non-Fungible Tokens (NFTs), various investors have made significant impacts by supporting promising NFT initiatives. Here are some notable NFT investors and their contributions during Q3 2023:
- 6th Man Ventures and Dragonfly Capital : Both 6th Man Ventures and Dragonfly Capital have actively invested in two NFT projects, showcasing their belief in the transformative possibilities afforded by NFTs.
- Fabric Ventures , OKX Ventures , and Tezos Foundation : These investors have also been vital in participating in two NFT fundraising rounds each, further emphasizing the diversification and potential within the NFT ecosystem.
These backers have not only provided essential financial support but have also contributed to ongoing development and innovation in Web3 and NFT sectors. Their portfolios span a wide range of projects, reflecting the multifaceted nature of the Web3 and NFT landscapes.
Understanding the Ongoing Challenges of Q3 2023
During the third quarter of 2023, the cryptocurrency community experienced a notably quieter period compared to the earlier, more chaotic first quarter. However, it still contended with challenges stemming chiefly from an uptick in scams and deceitful practices.
OpenSea’s ‘Deals’ Feature Fails to Make an Impact
OpenSea, a leading NFT marketplace, rolled out a new feature called “Deals.” This feature was designed to allow users to trade NFTs by swapping their own NFTs instead of relying solely on cryptocurrencies.
While the ‘Deals’ concept aimed to increase security and serve as an intermediary for transactions, it received mixed feedback. Many users voiced disappointment, noting that it arrived too late, coinciding with a downward trend in NFT market performance.
Web3 Fundraising Report for Q3 2023: An Insight into Changing Trends and Approaches - Metaverse Post
In this analysis, we dive into the latest shifts within the AI, cryptocurrency, and Web3 sectors, pinpointing the prominent industries and influential players that stood out over the quarter. QR-linked phishing scams Web3 Fundraising Report for Q3 2023: An Insight into Changing Trends and Approaches
In this analysis, we sift through the emerging patterns across AI, cryptocurrency, and the Web3 landscape, while spotlighting the most remarkable industries and personalities of Q3 2023.
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Conclusion
As the cryptocurrency market endures the ongoing bearish phase, its impact is increasingly visible in fundraising activities. The downward trend that began in early 2022 continued into Q3 2023.
- The quarter saw unprecedented lows in overall funding and the number of deals made, a situation not witnessed since Q4 2020. Specifically, the total funding for the quarter was just below $2.1 billion, distributed across 297 deals. This marks a significant 36% decline in both funding and deal frequency, compared to the last quarter.
- Metaverse Post presents its comprehensive Web3 Fundraising Analysis for Q3 2023. This document explores the most recent trends within the AI, cryptocurrency, and Web3 sectors, identifying the key sectors and leading figures of the quarter.
- Examining Q3’s Fundraising & Investment Stages
- An analysis of fundraising activities for Q3 based on their stages shows a clear trend towards prioritizing early-stage investments. The seed funding rounds, specifically, have taken the spotlight, raising an impressive total of $488 million over 98 rounds.
This notable shift toward investing in earlier-stage initiatives has been gradually gaining traction over the past three years, while later-stage investments have increasingly dwindled.
Examining Q3’s Fundraising & Investment Stages
Disclaimer
In line with the Trust Project guidelines The segment for early-stage deals—encompassing Pre-Seed, Seed, and Series A funding rounds—has seen its market footprint grow from 37% in Q4 2020 to a robust 48% in Q3 2023. In stark contrast, late-stage deals, usually associated with Series B or subsequent funding, have dramatically decreased from an 8% market share in Q4 2020 to a mere 1.4% by Q3 2023.
