Published on: 03/01/2023

Web3 sector collectively raises $7.1B in funding in 2022

According to the Metaverse Post’s year-end report, it has revealed that the Web3 sector raised $7.1 billion collectively in funding throughout 2022.

Despite the extended crypto winter, the total funding in 2022 was $4.8 billion higher than in 2021. The three sub-sectors receiving the highest support in 2022 were gaming, metaverse and social network.

Gaming received $4.49 billion in funding, which accounted for 62.5 percent of the total investment in the Web3 sector last year. Epic Games — known for its Unreal Engine tech and video game Fortnite — received the largest investment among gaming companies in 2022. The company received $2 billion in funding from LEGO parent companies KIRKBI and Sony. Epic concluded 2022 at a $31.5 billion valuation.

The metaverse space gained $1.82 billion in funding last year, accounting for 25.4 percent of the entire Web3 investment. Yuga Labs — known for its Bored Ape Yacht Club (BAYC) NFT collection — raised a significant amount of funding throughout 2022. In March, it managed to raise $450 million from investors to help launch Otherside.

Startups developing social networking apps for the decentralized Web3 also gained significant investment in 2022. This sub-sector raised $259.1 million last year, accounting for 3.6 percent of the total investment received by Web3. Analysts said this sub-sector was pivotal for Web3 development.

Web3 Infrastructure sub-sector gained $200.8 million in funding, being the fourth category receiving the largest investment. Meanwhile, AR&VR and AI sub-sectors raised $178.6 million and $136.5 million, respectively.

Immutable, Improbable, Sky Mavis and AngelList entered the top ten companies raising the highest funding last year, along with Epic and Yuga Labs. The NFT-focused Immutable managed to raise $200 million from investors. Both gaming company Sky Mavis and metaverse-focused Improbable gained $150 million. Meanwhile, startup-crowdfunding company AngelList secured $100 million.

Metaverse Post also revealed that four venture capitalists spent more than $1 billion on Web3 investment in 2022, with Paradigm posting the largest total investment of $2.5 billion. Paradigm supported 31 projects, including NFT marketplace Magic Eden and blockchain network Uniswap.

## Web3 predictions for 2023

Analysts have predicted that the Web3 market will grow rapidly in 2023. There are several growth factors that can support its development. On the other hand, analysts also discuss some factors that can restrain the sector.

The Web2 environment that most people use today already offers a higher degree of flexibility in comparison to the first-gen. However, there are still some limitations present in the virtual environment. Web3 is expected to provide an internet ecosystem that is void of any central authority.

Every internet user will be able to own, buy and profit from digital assets like NFTs. According to experts, once Web3’s use has widespread, blockchain applications will be more popular.

Analysts also noted that the COVID-19 pandemic had highlighted people’s need for quality internet infrastructure. Web3 can provide ease of digital transactions for internet users. It can also help businesses to scale up digitally.

The decentralization feature of Web3 can propel market growth. Transactions conducted on Web3 blockchains are tracked, increasing transparency. Furthermore, people can perform transactions within minutes or even seconds.

Another supporting factor for Web3’s growth in 2023 is its rapid development. Web3 startups keep coming up with new innovations due to the high competition within the sector. New Web3 findings have helped to reduce operating costs, enhance speed and lower the risks of cyber attacks.

Although Web3 has some measures to prevent cybercrime, there is still a risk that unauthorized materials can be distributed throughout the ecosystem. Ideally, Web3 does not have a governing body to speed up the growth of decentralized blockchain. However, it can cause cybercrime attacks to spread out.