The decline in Web3 funding is attributed to various factors, including the difficulty in defining Web3, potential investor fatigue from navigating digital worlds during the pandemic, and uncertainty over how to regulate crypto, a key aspect of Web3. Additionally, high interest rates and inflated startup valuations in 2021 have made venture capitalists more cautious. The technology's complexity and usability issues also pose challenges. For a resurgence in the industry, Web3 needs to become easier for average people to use and provide compelling reasons for them to engage.
Key takeaways:
- Funding for Web3 startups declined by 73% in 2023, with the startups netting $7.8 billion compared to $21.5 billion in 2022.
- There is uncertainty over how Web3 technology can be distributed to a large user base, and the difficulty in defining Web3 has led to a lack of investment.
- Regulation of crypto, a key aspect of Web3, is a concern for investors who are waiting for regulatory clarity before investing.
- Web3 technology is currently difficult to use, and until it becomes more user-friendly, it will be hard for the industry to recover.