Web3 firms raise $7.1B in funding through 2022

The Web3 project raised more funding last year than in 2021, despite the pressure of the bear market. So what are the opportunities for 2023?

Web3 investment interest surged in 2022, divided into four key areas. There is interest from commercial banks, namely Morgan Stanley and Goldman Sachs, then funding with global VCs joining the game as successful Web3 Ventures.

Meanwhile, other trends saw Tier 1 digital asset institutions such as Binance Labs, Coinbase Ventures and Kraken Ventures driving or instead pooling in funds. Finally there are network-specific funds as explained in the screenshot below.

Web3 Investment Trends
Source: Bulk Investors

But despite the crypto slump and general bearish sentiment, 348 startups collected or raised a total of $7.16 billion in investment last year. This was up from $4.5 billion over the previous year according to a Metaverse post.

The report segregated the amounts under gaming, metaverse, social networks, infrastructure, artificial reality and virtual reality (AR and VR) and artificial intelligence (AI). However, with increasing innovation and demand, various categories will grab headlines throughout 2022.

Metaverse and gaming projects attract millions of dollars in funding in the second quarter of 2022. In addition, VCs maintained their allocation to play-to-earn projects, “paying particular attention to blockchain casinos, collectibles, loot boxes, and football-themed games,” the report said.

But Q4 saw some turning points.

change in investment strategy

In the past quarter, investors turned their attention to augmented, virtual and mixed-reality startups. Artificial intelligence, such as the AI ​​chatbot ChatGPT, has also received a lot of interest from VC firms. For example, InworldAI raised $50 million in its Series A round, followed by SEED with $41 million. SingularityDAO raised $25 million, and MarqVision raised nearly $20 million in a Series A game.

Adding more support, the spokesperson said: “VCs are unlikely to lose interest in artificial intelligence (AI) in 2023, with more AI startups likely to receive funding.”

BeInCrypto reported an increase in AI-authored books on AI farming that came out last year.

Moving on to another change in the narrative around investment. Given the increasing number of hacks and other illegal actions, investors focus on the importance of security in Web3, leading to more investment in infrastructure startups. Here is the list of top projects under the mentioned categories which raised the most funds.

Fundraising activity in 2022 broken down by different categories.  metaverse post
Source: Metaverse Post

List of Top Projects by Category

Moving on to individual entities within categories, gaming giant Epic Games closed $2 billion in investment money from Sony and LEGO owner KIRKBI. The creators of Fortnite will use the funds to “advance their vision of the Metaverse and support its continued development.” At the time of writing, the company is valued at $31.50 billion.

Startups attracting the most investment in 2022.  metaverse post
Source: Metaverse Post

Heading to Yuga Labs, the makers of Bored Ape Yacht Club (BAYC), raised over $400 million to build the Otherside Metaverse. Recently, Yuga Labs released a “First Trip” of the Underside experience and teased BAYC fans with an upcoming Second Trip.

Another big name that made the top three list was venture capital Animoca Brands, a metaverse-focused startup. Sydney-based Layer 2 NFT firm, Immutable, came next in line. The report further puts some focus on deep-pocketed investors, namely the four spenders whose total spending exceeds $7 billion.

largest investor

Leading the charge is Paradigm, a crypto-focused investment firm based in San Francisco. The renowned firm spent $2.50 billion in 2022 as it backed 31 projects such as Coinbase, Uniswap, Magic Eden, and Optimism.

Most active funds with over $1 billion invested.  metaverse post
Source: Metaverse Post

Following this, Andreessen Horowitz, or a16z, became the second most active investor behind Paradigm with $2.20 billion. Meanwhile, HiveMind Capital Partners invested $1.5B in Web3 startups, while Binance Labs ranked #4 with $1B spent in 2022.

Following this, Andreessen Horowitz, or a16z, became the second most active investor after Paradigm with $2.20 billion. Meanwhile, Hivemind Capital Partners invested $1.5B in Web3 startups, while Binance Labs ranked #4 with $1B spent in 2022.

While investing within this group may sound reassuring and attractive, failure is an integral part of it. The first exchange will be Singapore-based crypto hedge fund Three Arrows Capital, also known as 3AC. The collapse caused millions of dollars in damage. This list continues to grow as it is widely covered by BeInCrypto.

Overall, investors should exercise extreme caution in dealing with technologies that continue to evolve and mature over the years.


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