Crypto Winter Isn’t Chilling VCs From Investing in Web3, Says PitchBook Analyst

Robert Le, senior emerging technology research analyst at the data and research company, breaks down investment in the coming months and details which areas of the industry are seeing growth right now.

AccessTimeIconDec 16, 2022 at 8:20 p.m. UTC

Crypto winter hasn’t hit all corners of the industry the same way. According to a senior analyst at data and research firm PitchBook, venture capital investors are still betting on Web3.

Robert Le, senior emerging research analyst, told CoinDesk TV’s “First Mover” that VC funding has been shifting away from centralized crypto services such as lenders and exchanges, while companies involved with expanding Web 3 have seen an increase in investment.

“Web 3 is one area that investors have deployed a lot more money over the last six months,” Le said, including the metaverse, gaming and other blockchain-based technologies. During the third quarter of 2022, VCs invested an estimated $1.5 billion into Web3-based companies.

According to PitchBook's latest report on third-quarter emerging technologies, by 2027 Web3-based content platforms will bring in an estimated $39 billion in revenue, versus the $3.4 billion in revenue that is expected to be earned by the end of 2022.

“What you have seen, though, is that there’s been a shift away from centralized crypto services,” Le added.

VC investing for “exchanges, custodial wallets, crypto on-ramps” and “a lot of centralized lending and borrowing services” fell by about 85%, he said, quoting the report. Le said while the decline is sharp, it’s “not surprising” considering the high-profile failures of many companies, including Celsius Network and BlockFi.

Le said the decline in VC funding was taking place “even before the FTX collapse.” The failed centralized exchange, based in the Bahamas, filed for bankruptcy protection last month, not long after a CoinDesk report revealed FTX’s corporate sibling, Alameda Research, was being propped up by FTX’s native token, FTT.

Looking ahead, Le said crypto winter is going to prompt “non-crypto” investors to get out, and that is why “investments are going to continue to decline into 2023.”

“You're gonna really see a bifurcation,” he said. “You know, over the last 18 months everyone was investing in the crypto space, whether it's crypto-native investors, hedge funds, crossover funds, family offices. You're gonna see a lot of the non-crypto investors move away from this area.”

However, while venture funding will continue to decline into 2023, his company is “looking at some time in the second half of next year where venture investments will continue to increase. And we're being cautiously optimistic here."

By the second half of next year, the firm said in its report it expects to see an increase in disclosures from crypto platforms, as well as the possibility of regulatory clarity, which could ultimately give crypto investors “a little more confidence.”


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Fran Velasquez

Fran is CoinDesk's TV writer and reporter.