Venture Capital (VC) funding hasn’t been drying up for companies working on Web3, according to a senior analyst at data and research firm PitchBook, who revealed that Web3 companies have in fact seen funding increase during the crypto winter.

According to Robert Le, a senior merging research analyst at PitchBook, VC funding has been moving away from centralized cryptocurrency services and into decentralized platforms. Le’s words came during an interview on CoinDesk TV, in which he said:

Web 3 is one area that investors have deployed a lot more money over the last six months.

The area includes blockchain-based technologies such as the Metaverse, play-to-earn and play-to-own games, and more. During the third quarter of the year, the news outlet reports, VCs invested an estimated $1.5 billion into Web3 companies.

Web3 is a term first coined by Ethereum co-founder Gavin Wood as a solution to a problem felt when the smart contract platform first launched: that Web requires a lot of trust to function. Since then, the term has been used to describe a trustless, more decentralized, permissionless World Wide Web that takes power from tech giants and gives it to users in the form of ownership.

According to PtichBook, by 2027 Web3-based content platforms are estimated to bring in $39 billion in revenue, compared to the $3.4 billion that is expected to be earned by the end of this year.

Le added there has been a shift away from centralized services from VCs, which were investing in exchanges, custodial wallets, and crypto on-ramps. These investments, he said, fell by about 85% in a sharp but “not surprising” decline given the failure of several centralized companies this year, including Celsius Network and BlockFi.

Per the analyst, the drop in VC funding for centralized platforms was occurring even before the collapse of FTX. Looking ahead, he said he sees 2non-crypto” investors moving out of the space and predicted a decline in 2023.

You know, over the last 18 months everyone was investing in the crypto space, whether it’s crypto-native investors, hedge funds, crossover funds, family offices. You’re gonna see a lot of the non-crypto investors move away from this area.

Although venture funding is expected to continue declining into 2023, a PitchBook report suggests that venture investments may start to increase again in the second half of next year.

The report also predicts that there will be an increase in disclosures from crypto platforms and the possibility of regulatory clarity in the same time frame, which could give crypto investors more confidence in the market.

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