2021 was a great year for the blockchain and crypto space in terms of investments and growth. The emergence of trends like Web3.0 has expanded the scope of blockchain technology beyond finance. Despite several major economies plunging into an economic crisis in 2020, the crypto industry manages to withstand the impact. Thanks to the increasing adoption of blockchain and its applications, the industry’s growth has been steady. Investment trends in the Web3 space shattered all the records. The global funding in blockchain surged by 713% from $3.1 billion in 2020 to $25.2 billion in 2021. Web3 startups attracted a major chunk of these funds.
It is just the beginning of the mass adoption of Web3.0. Only a few million users have the access to Web3.0 in comparison to billions of users for Web 2.0. The applications of Web3.0 make it a lucrative market for investors.
Investment Trends In Blockchain & Crypto (2020-2022)
Source: Pitchbook, Crunchbase, The Block
Decentralized Finance (DeFi) attracted the highest investment in 2020, outplaying all the other industries comfortably. In the year where the median raise was $1.8 million, over 49% of the total investment went to DeFi & Fintech. Investment in DeFi & Fintech was distributed among 34 different categories including Exchanges, Trading, Payments, and Utility. The increasing utility of DeFi in banking, finance, and insurance continues to attract investors to put their money in the industry. While trends like NFT started picking up in 2020, DeFi was clearly the frontrunner.
Source: Pitchbook, Crunchbase, The Block
Funding Trends In 2020
Seed equity rounds were the most common funding rounds in 2020 and maximum cash was poured into crypto and blockchain startups in the Series C funding round.
As far as Web3 is concerned, March and December were the most fruitful months, with $510,637,303 poured into Web3 startups in December alone. As investment in crypto increases exponentially, Web3 startups are set to boom in the coming years.
2021 In A Glimpse
2021 marks the evolution of Web3 into a well-recognized industry. With a staggering rise in investment in the Web3 industry and the inflow of talent, Web3 remain a hot topic among all the crypto enthusiasts. In the year when the crypto market cap breached the $3 trillion mark, as many as 65 crypto/blockchain startups attained more than a billion in valuations. 40 startups reached unicorn status in the same year.
Key Takeaways From 2021 Funding Trends
- 50+ startups raised $100M+
- 65+ startups reached $1B+ in market valuation
- 40+ firms reaching unicorn status
Both developers and investors show great enthusiasm toward the Web3 sector. With innovation and decentralization at the core of the entire blockchain and crypto space, the Web3 ecosystem is bound to see a boom just like the DeFi ecosystem. 2022 could be the make or break year for Web3 startups. The Web3 market is set to grow at a CAGR of 44.6% from 2023 to 2030. Most probably, the foundation of this growth could be laid in 2022 itself. As decentralized technologies go mainstream, widespread adoption of Web3 will become inevitable.
A Record-Shattering 2022 For Web 3.0
Statistics show that the first quarter of 2022 is already outpacing the growth trends and funding trends in the entire 2021. A whopping $100 billion VC investment is expected to be poured into the blockchain and crypto space. According to a Cointelegraph report, 2022 Q1 was 329% greater in VC capital investment in comparison to 2021 Q1.
The first quarter of 2022 has been exceptional for the Web3 space in terms of funding. Interestingly, Web3 startups outpaced other startups in terms of funding in the first quarter. Here’s how different industries within the blockchain space fared in various funding rounds
Percentage-wise Funding Share For Different Spaces
- Web3.0: 26.5%
- DeFi: 23.2%
- Infrastructure Projects: 19.5%
- NFT Sector: 18.3%
- CeFi: 12.5%
Key Takeaways From 2022 Q1
- 514 blockchain-related deals by venture capitalists
- DeFi and Web3 accounted for most VC activities
- The top 10 VC deals ranged from $385 million to $1.15 billion
- $5.7 billion+ capital investment concentrated in expansion stages
What To Expect?
While DeFi is still leading in terms of industry adoption and investments, Web3 has witnessed impressive growth in Q1 2022, paving the way for massive growth in the coming years. As of now, there are more than 4.28 billion internet users globally. The number is likely to go beyond 7.5 billion by 2030. Users are getting increasingly aware of the benefits of decentralization. The introduction of concepts like better data security and content monetization could be game-changing for the growth of the Web3 ecosystem. The sentiment is bullish for the Web3 industry and it could very well dominate the funding trends in the next 3 quarters of 2022 as well.