Web3 Funding Is Cratering, Data Shows — Potentially Spelling Trouble for Numerous Music Startups

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Photo Credit: Sebastian Herrmann

Following 2022’s “crypto winter” and the collapse of FTX, Web3 funding reportedly cratered by 82 percent year over year during the opening quarter of 2023, and the downturn could potentially be impacting all manner of music plays.  

The diminishing financial support behind Web3 (defined in this instance as startups operating in crypto and/or blockchain) just recently came to light in an analysis from Crunchbase. Per the source, the sphere’s venture funding totaled approximately $1.7 billion during Q1 2023.

While sizable in its own right, the sum reflects the aforesaid 82 percent year-over-year (YoY) decline as well as an approximately 30 percent falloff from 2022’s final quarter. Meanwhile, the same outlet relayed that the number of Web3 investment deals, 333, had continued to decrease during 2023’s initial three months.

The total had come in at 369 in Q4 2022 and at over 500 during last year’s first quarter, according to Crunchbase – with Q1 2023’s figure being the lowest since Q4 2020. Of course, it should also be highlighted that investors have likewise started pouring billions into artificial intelligence startups this year.

For additional industry-specific context, 2022 delivered a multitude of low-seven-figure raises for Web3 music startups.

The long list of entities that scored investor support on the year includes but isn’t limited to artist-investment platforms Exceed ($8 million in October) and anotherblock ($2.5 million in June), music NFT platform OneOf ($8 million around August), “Web3 music specialist” Public Pressure ($6 million in December), Web3 audio platform Tamago ($1 million in May), and artist-fan social metaverse Medallion ($9 million in May).

And despite the more recent rollout of a select few Web3 music startups – Snoop Dogg-founded livestream platform Shiller among them – time will reveal the precise impact of the broader sector’s investor-capital dip. Needless to say, the music industry, like the wider tech space, has grappled with a number of layoffs during the past six or so months.

But against the backdrop of cooling investor interest in Web3, it bears reiterating that big-funded music plays including Gimme Radio (which raised $3 million last May and permanently shut down this month) and Mandolin (which was shuttered this week, having raised $17 million total from investors) have ceased operating altogether as of late.

Expanding upon the latter, an abundance of capital poured into livestream startups during 2020, when lockdown measures and large-gathering bans prevented the vast majority of in-person concerts and festivals from taking place. Amid the gradual return of traditional live entertainment, however, VNUE closed its StageIt buyout in early 2022, Driift scooped up Dreamstage last September, and Sessions went dark towards 2023’s beginning.