Dot com three point zero

During the first quarter of 2023, venture funding into companies building next-generation, decentralized internet companies known as Web3 fell 82% year on year to USD 1.7 billion, according to Crunchbase.  For comparison, total venture funding in 1Q23 fell 53% year on year to USD 76 billion.  Given this dramatic fall in funding and sentiment, it is natural to compare the trend to the so-called ‘internet dot bomb’ collapse of first-generation internet company valuations in 2000  and 2001.  However, comparisons are difficult to make as many of these companies were publicly listed, and therefore user metrics, revenues, profits and losses known.  In contrast, despite raising more than USD 50 billion in venture funding over the last two years, given their private status very little is known about the progress of Web3 firms.  On a positive note, in hindsight we can say that the dot com crash marked the beginning rather than the end of the internet era.  Whether the same will be said for Web3 is difficult to predict, but interesting to watch.

Source: Crunchbase, April 2023