The Web 3.0 project raised more funds last year than in 2021, despite pressure from the bear market. So what opportunities lie ahead for 2023?
2022 saw a growing interest in investing in Web 3.0, divided into four key areas. There is interest from commercial banks, namely, Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS), then the successful financing of Web 3.0 companies with global venture capitalists joining the game.
Meanwhile, other trends included tier 1 digital asset institutions such as Binance Labs, Coinbase (NASDAQ:COIN) Ventures and Kraken Ventures that promoted or instead pooled funds. Lastly, there are the network-specific backgrounds, as mentioned in the screenshot below.
But despite the cryptocurrency slowdown and overall bearish sentiment, 348 startups raised or raised a total of $7.16 billion in investment last year. This was more than $4.5 billion compared to the previous year according to Metaverse Post.
The report separated the amounts into Games, Metaverse, Social Media, Infrastructure, Artificial Reality and Virtual Reality (AR and VR) and Artificial Intelligence (AI). Although, with increasing innovation and demand, several categories made headlines throughout 2022.
In the second quarter of 2022, metaverse and games projects attracted millions of dollars’ worth of funding. In addition, venture capitalists maintained their allocations to gambling-to-win projects, “paying special attention to blockchain casinos, collectibles, loot boxes and football-themed games,” the report said.
But Q4 saw some fun.
Change in investment strategy
In the last quarter, investors shifted their attention to augmented, virtual and mixed reality startups. Artificial intelligence, such as the AI chatbot ChatGPT, also received a lot of interest from venture capital firms.
For example, InworldAI raised $50 million in a Series A round, followed by SEED with $41 million. SingularityDAO grossed $25 million and MarqVision saw around $20 million raised in a Serie A game. Adding further support, the spokesperson said:
“Venture capitalists are unlikely to lose interest in Artificial Intelligence (AI) in 2023, and more AI startups are likely to get funding.”
BeInCrypto reported on the rise of AI Farming in AI-written books that appeared the previous year.
Moving on to another shift in the narrative around investments. Given the rise of hacks and other illicit operations, investors are focused on the importance of Web 3.0 security, leading to increased investment in new infrastructure. Here is a list of the top projects in the mentioned categories that raised the most funds.
List of best projects by category
Moving on to individual entities within the categories, Epic Games, the gaming giant, closed $2 billion of investment money from the owner of Sony (TYO:6758) and LEGO, KIRKBI.
The creator of Fortnite would use funds to “advance his vision of the metaverse and support its continued growth.” At the time of writing, the company is valued at $3.5 billion.
Moving on to Yuga Labs, the creator of Bored Ape Yacht Club (BAYC), raised more than $400 million to build the Otherside metaverse. Lately, Yuga Labs launched the “First Trip” of the Otherside experience and teased BAYC fans with the upcoming Second Trip.
Another big name that made it to the top three list was venture capital Animoca Brands, a metaverse-focused startup. Immutable, a Sydney-based Layer 2 NFT company, was next in line.
The report focuses even more on the wealthy investors, i.e. four spenders with a total expenditure of more than 7 billion dollars.
The biggest investors
Leading the charge is Paradigm, a San Francisco-based crypto-focused investment firm. The famous firm spent $2.5 billion in 2022 by backing 31 projects, such as Coinbase, Uniswap, Magic Eden and Optimism.
Next, Andreessen Horowitz, or a16z, became the second most active investor after Paradigm with a sum of $2.2 billion. Meanwhile, HiveMind Capital Partners invested $1.5 billion in Web 3.0 startups, while Binance Labs ranked No. 4 with a $1 billion spending spree in 2022.
Next, Andreessen Horowitz, or a16z, became the second most active investor after Paradigm with a sum of $2.2 billion.
Meanwhile, HiveMind Capital Partners invested $1.5 billion in Web 3.0 startups, while Binance Labs ranked No. 4 with a $1 billion spending spree in 2022.
While investing within this cohort may sound safe and lucrative, failures are an integral part of it. The first exchange would be Singapore-based cryptocurrency hedge fund Three Arrows Capital, also known as 3AC. Millions of dollars were lost after the collapse. This list continues to expand as BeInCrypto covers it widely.
In general, investors should exercise extreme caution when it comes to technologies that continue to develop and mature over the years.