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Web3 got more interest than fintech before FTX blowup

Nov 29, 2022
Illustration of a pattern of hands trading tokens.

Illustration: Gabriella Turrisi/Axios

Top early stage investors during the third quarter of the year were still more excited about DeFi and web3 than about all other industries, according to Pitchbook's Tuesday Emerging Tech Indicator.

Why it matters: This comes after the collapse of crypto hedge fund Three Arrows Capital and the Terra stablecoin ecosystem — meaning a sizable cohort of long-term crypto believers still remain in venture capital.

Details: Pitchbook found that its venture investors top 15 (defined by exits, and by percentage of companies that raise subsequent rounds of capital) put the most capital into web3 and DeFi companies for the fifth consecutive quarter.

  • They invested $879 million across 24 early stage deals in the space, beating out categories like fintech and biotech.

Yes, but: The industry is still waiting to see how FTX's blowup will affect startups looking to raise funding. The bankruptcy created a contagion effect and took out FTX as an active investor across the space.

  • "We expect the recent failure of FTX will lead to a decline in early stage cryptocurrency investing in coming quarters," the analysts wrote.
  • The two biggest crypto deals of the third quarter involving these venture investors were Mysten Labs and Aptos Labs — both of which also raised rounds led by FTX Ventures. That means web3's five quarter streak may already be dead.
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