Web3 Fundraising Report for Q2 2023: Trends in Gaming and Social Network

Trends in web3 – top projects by category

In the second quarter of 2023, 78 web3 projects received $367,955,000. Gaming is the leading industry of the quarter; it has raised 31.24% of the total web3 fundraises in the second quarter of 2023. Gaming is followed by social network and payment startups, which have received $29 million and $25,750,000, respectively. 

Gaming

Overall, the gaming category saw 20 startups raise $115,100,100. This result makes the gaming category the most attractive within the web3 sector. However, it’s worth noting that investors were slightly more interested in the sector in the first quarter of this year when 23 gaming startups raised $201,720,473. 

Throughout 2022, the gaming category received $4,487.3 million. Venture Capital firms were focused on play-to-earn projects, blockchain casinos, collectibles, loot boxes, and football-themed games.

Web3 gaming studio Pomerium received $20 million in a Strategic round led by an undisclosed angel investor. The studio will use the funds to expand its portfolio of blockchain-based games.

Karate Combat raised $18 million in a round led by Bitkraft Ventures. Delphi Digital, The Operating Group, Hashkey, Alpha Wave Global, Lattice, M13, Santiago Santos, and RooxieXBT are among the other participants. The company plans to use the funds to continue the development of its full-contact martial arts league, powered by Unreal Engine’s XR technology. 

Web3 gaming ecosystem RACA received $16 million in a Strategic round led by DWF Labs. The investment firm has also purchased an unspecified amount of RACA tokens as part of the deal. The company will use the funding to continue expanding its web3 gaming ecosystem. 

Web3 game launcher and game store aggregator HyperPlay raised $12 million in a Series A round co-led by Griffin Gaming Partners and Bitkraft Ventures. Among the other investors are ConsenSys, Ethereal Ventures, Delphi, Game7, Mirana Ventures, and Monoceros Ventures. The company reportedly plans to use the funds to enhance its flagship game launcher and increase its international presence.

Open-world RPG adventure game Illuvium received an additional $10 million in s Strategic round led by Framework Ventures. The developer will use the funding to accelerate the expansion of its innovative AAA gaming universe. In addition, the funds will go to the support of remote contributors. 

Social Network

Social network is the second-trending industry of Q2 2023. With only three startups raising funds within this category, it has still attracted $29 million in investments. 

Social primitive protocol Lens received $15 million from angel investors Haydan Adams of Uniswap, Alex Atallah of OpenSea, Bali Srinivasan, Sandeep Nailwal of Polygon, Kevin Owocki of Bitcoin, Hitren Shah of Nire, Sébastien Borget of The Sandbox, Maggie Love of SheFi, and pplplsr of Shibuya. The startup will use the funds to “accelerate the adoption of the next generation of the internet powered by human connection –- the people-powered social layer.”

Information protocol RSS3 raised $10 million in a private token sale to DWF Labs. The startup has recently introduced RSS3 AIOP, an artificial intelligence training environment that provides web3 information. 

PoP Planet, a private domain social management tool for web3 creators, raised $4 million in a round led by Foresight Ventures. The startup will use the funds to support iteration and product development. In addition, PoPP will sponsor creator incentives once it is launched.

Payment

In terms of funds raised, the payment category is the third leader in the second quarter of 2023. Overall, VC firms paid attention to seven startups, which have raised a total of $25,750,000. 

Azteco, a provider of vouchers for small amounts of Bitcoin for everyday use, raised $6 million in a Seed round led by Jack Dorsey. Lightning Ventures, Hivemind Ventures, Ride Wave Ventures, Aleka Capital, Visary Capital, Gaingels, David Van Der Weele, and Sunil Rajaraman participated in the round. The startup will use the funds to develop the product and expand to Latin America and Europe.

Poko, a provider of fiat payments for web3, received $4.5 million in a Seed round led by Y Combinator, NAZCA, and Global Founders Capital. Goodwater Capital, Soma Capital, Amasia, CreditEase, Dentsu Ventures, Orange DAO, MS&AD Ventures, and Plug and Play backed the round. The startup currently focuses on a direct checkout and an on-ramp aggregator. 

Crypto payments platform BoomFi raised $3.8 million in a Seed round led by White Star Capital. The startup will use the funds to launch strategic partnerships, develop the product, and expand its merchant base in the web3 sector.

Insurance

Meanwhile Insurance Bitcoin raised $19 million in two Seed rounds. ChatGPT CEO Sam Altman and former Stripe executive Lachy Groom co-led the first round. Gradient Ventures led the second Seed round. Standard Crypto (the former name of Meanwhile Insurance Bitcoin) is also among the participants. The company plans to use the funds to expand the development team for its new product. 

Data

In Q2 of 2023, four data startups attracted received $13.5 million. 

Subgraph and blockchain indexing platform Satsuma raised $5 million in a Seed round co-led by Initialized Capital and Archetype. The other investors include OpenSea, Y Combinator, Homebrew, and South Park Commons.

Digital assets data and insights provider PYOR received $4 million in a Seed round led by Castle Island Ventures. Hash3, Antler, Future Perfect Venture, Force Ventures, CoinSwitch Ventures, Coinbase Ventures, and Balaji Srinivasan backed the round. The startup will use the fund to expand the team.

Funding

Delphi Labs, the web3 accelerator arm of Delphi Digital, received $13.5 million from P2P Validator and Jump Crypto. Delphi Labs will use the funds to develop an accelerator focusing on the growth of teams that plan to launch web3 projects. 

Metaverse

Three metaverse startups have raised $11 million in the second quarter of this year. 

It’s worth noting that metaverse projects are not much of investors’ interest anymore. In Q2, such companies received $13 million, while in 2022, the metaverse category raised a total of $450 million. The industry was at its peak in the second half of 2022. Since then, investors’ interest has gradually declined. 

AI-driven social metaverse company Social Future received $6 million from SNZ, Everest Venture Group, Folius Ventures, Y2Z Ventures, Mask Network, Tess Ventures, Stratified Capital, and Mindfulness Capital. Several strategic funds backed by public companies also participated in the round. The startup is developing “MAY” – “Meet Another You,” a tool that enables immersive social experiences via personalized avatars.

CEBG Game, an anime MOBA and battle royale game developer, received $3 million from Hashkey Capital, GSR Ventures, KuCoin Ventures, A&T Capital, YouBi Capital, SNZ Holding, BitFury Capital, and Kernel Ventures.

Singapore-based metaverse company GoodGang Labs received $2 million from Kakao Investment. The startup is building a communication platform and technology for avatars. 

Media

Web3-focused media company Blockworks received $12 million in a round led by 10T Holdings. Framework Ventures and Santiago R. Santos are among the backers. The company will use the funds to accelerate the research and data offering and enable global expansion. 

Education

Alternative education system TinyTap received $8.5 million from Sequoia China, Shima Capital, Polygon, Liberty City Ventures, Kingsway Capital, and GameFi Ventures. The service, “owned” by teachers and the community on web3, will use the funds to expand its team and develop the product. 

Wallet

Hardware wallet solutions provider Tangem AG received $8 million from Shima Capital. The company will reportedly expand its product offerings in order to “solidify its position as a leader in the hardware wallet space.”

Marketing

Two startups within the marketing category have attracted investments in Q2 2023. Overall, the industry has received $8 million. 

Wallet relationship management platform Absolute Labs raised $8 million in a Seed round. Among the investors are Aglaé Ventures, Near Foundation, Alpha Praetorian Capital, TLF Ventures, MoonPay, Plassa Capital, Punja Global Ventures, Samsung Next, W3i, and Animoca Brands’ Sparkle Ventures. The company is developing a web3-focused marketing software. 

Betting

FARE Protocol raised $6.2 million in a Seed round led by Goat Capital and C Squared Ventures. The other investors include 6th Man Ventures, Arrington Capital, Eniac Ventures, Spark Digital Capital, Morningstar Ventures, Quantstamp, and DWeb3. The company’s ecosystem is built on probability smart contracts, “triggered by transparent on-chain events based on probability variables.”

AI

In Q2 2023, three web3 AI-focused startups raised a total of $11.3 million. In 2022, the category received $36 million throughout the year. While the result might not seem as high as expected due to the boom of artificial intelligence tools and apps, it is important to note that most AI companies, like OpenAI, do not fall under the web3 category. 

AI-powered search engine for crypto Kaito raised $5.5 million in a Series A round led by Superscrypt and Spartan.

AI and blockchain fusion platform AiONE received $3 million in a private token sale. More than that, AiONE’s token was launched on the BNB Smart Chain network. 

Generative AI engine for web3, games, apps, media, and online communities, Orbofi AI raised $2.8 million in private and public token sales. The round was co-led by Cogitent Ventures, OIG Capital, CSP DAO, Zephyrus Capital, and Halvings Capital. The startup will use the funds to expand its engineering and expansion teams and accelerate its work in the web3 space. In addition, the company plans to launch a mobile app, scheduled to drop in the third quarter of 2023. 

Development

In difference to the first quarter of 2023, where the development category was absent, in Q2, five web3 development startups received $19.9 million.

Informal Systems raised $5.3 million in a round led by CCMC Global. Among the other participants were Nascent, DWeb3 Capital, and Maven11. The startup will use the funds to expand its security auditing division. 

Web3 infrastructure developer Startale Labs raised $3.5 million in a Seed round led by tech giant Sony. Notably, the President and Representative Director of Sony Network Communications Inc., Jun Watanabe, was appointed as a director of Startale Labs as part of the partnership. 

Web3 UI components development platform Sort raised $3.5 million in a Seed round co-led by Lemniscap and The General Partnership. The startup will use the funds to expand its product offerings and its team. 

Research

In the second quarter of 2023, VC firms and angels invested in three research startups. The category has raised a total of $11.1 million. 

Tokenized social network ResearchHub raised $5 million in a Series A round led by Joseph Jacks of OSS Capital. The other participants include Boost VC, Bob Young of RedHat, Guillermo Rauch of Vercel, Amjad Masad of Replit, and Garry Tan of Y Combinator. The platform helps scientists monetize their research. ResearchHub will use the funds to expand the platform in order to develop new tools and features and reach more international scientists.

Online life science research collective LabDAO raised $3.6 million in a round co-led by Village Global and inflection.xyz. Among the other participants were North Island Ventures, Seed Club Ventures, ID Theory, Road Capital, Curve Labs, gmjp.lol, Molecule, Gnosis DAO, The LAO, Orange DAO, Beaker DAO, Spaceship DAO, and Balaji Srinivasan. The collective aims to decentralize drug discovery. 

Security

CAT Labs raised $4.3 million in a Pre-seed round led by Castle Island Ventures, Brevan Howard Digital, CMT Digital, and RW3 Ventures. Newark Venture Partners, Hash3, Borderless Capital, Cryptoverse Ventures, and Outshine Ventures backed the round. The startup is developing cybersecurity tools that will fight crypto-enabled crime. 

Communication

In Q2, three communication startups raised $9.8 million. 

Web3 notification system Yoz Labs raised $3.5 million in a round led by Electric Capital. Collab+Currency, Dapper Labs, Coinbase Ventures, Form Capital, North Island, Mike Krieger, and Naval Ravikant also participated in the round. The startup will continue developing its scalable massaging rails that enable developers to send immediate on-chain notifications to users.

APIs

AI-powered web3 developer platform Airstack raised $4 million in an extended Pre-seed round led by Superscrypt. Hashed, NGC Ventures, Prima Capital, UOB Venture, Signum Capital, Artichoke Capital, WWVentures, Cypher Capital, Cyber Network, Peridon Ventures, WestWave Capital, ACAIA, ODA Capital, LECCA, CoinSwitch, and several angel investors backed the round. 

The platform provides fast and easy access to on-chain data across projects and blockchains. It has recently updated its Jam social app. 

Bandwidth

Syntropy, a distributed routing protocol for the internet, raised $4 million in a Post-seed round. Among the participants were Alpha Transform Group, Alphemy Capital, Denali Digital, Saxon Ventures, and FirstBlock Capital. The startup will use the funds to accelerate its growth and innovation. 

Accounting

Entendre Finance, which provides accounting and bookkeeping solutions for businesses in web3, raised $4 million in a Seed round led by Basis Set. Valhalla, Caffeinated, Moonpay, Alumni, MDig, and Alpine are among the participants.

“The next 12-24 months will be critical for the longevity of blockchain companies and adopters. They must implement better systems and internal controls. Our focus is on onboarding as many businesses as possible, so that their accounting costs are inverse with their continued growth,” said the CEO and founder of Entendre, Kareem Khattab.

Trends in NFT

In the second quarter of 2023, 21 NFT projects raised $72,816,000.

Marketplace

NFT marketplace and aggregator AlienSwap raised $12 million in a Strategic round co-led by NEXT Leader Capital and C² Ventures. Among the other participants are OKX Ventures, Araceae Capital, BIP32 Venture, Hyper10n Capital, Eureka Trading, Mission Street Ventures, Phyrex, and existing Seed round investors. The startup will use the funds to expand its engineering team and develop innovative NFT liquidity tools and trading products. In addition, AlienSwap plans to increase investment in NFT infrastructure. 

Trading

Tabi, a multi-chain NFT publishing and trading platform, raised $10 million in an angel funding round. Animoca Brands, Draper Dragon, Hashkey Capital, Infinity Crypto Ventures, Youbi Capital, Bo Feng of Dragonfly Capital, Riyad AD of Saudi Arabia, and Suji Yan of Mask Network participated in the round. The startup plans to use the funds for the development of its gaming ecosystem and the construction of an on-chain identity protocol. 

Collectibles

NFT project Pudgy Penguins received $9 million in a Seed round led by 1kx. Big Brain Holdings, Kronos Research, Old Fashion Research, CRIT Ventures, and LayerZero Labs’ founders backed the round. The organization will use the funds to scale its intellectual property and expand the team.

Perpetual carbon-capture NFT company Ecosapiens raised $3.5 million in a Seed round led by Collab + Currency. Among the other investors are the crypto influencer gmoney, Shan Aggrawal of Coinbase Ventures, and Ryan Carson of Moonbirds. The funds will be used for the development of the Ecopsapiens marketplace. More than that, the startup plans to test out minting strategies and forge new brand partnerships.

Intelligence

NFT analytics platform Mnemonic raised $4 million in a Seed round led by Kinetic. Sound Ventures, Tribe Capital, Coinbase, IntoTheBlock, and People.ai backed the round. The startup will use the funding to develop its B2B API platform, focused on providing NFT analytics.

Gaming

NFT entertainment and gaming network Gameta raised $5 million in a Seed round. Among the participants are Binance Labs, Huobi Ventures, Arcane Capital, Ceras Ventures, StartVC, Gate.io Labs, W3Coins, Redline DAO, Definancex, Rana Capital, and Infinity Labs. The startup will use the funds to accelerate the development of its game ecosystem, NFT system, and tokens. Gamete aims to attract 20 million users. 

Music

Swedish music platform Anotherblock received $4,347,000 in a round led by Inventure, Maex Ament of Centrifuge.io, and Fedrik Haha of Dune.xyz. Stable Node, DannyBoyStyles, and several existing investors backed the round. The startup aims to make music rights accessible and democratic.

Minting

NFT-to-product platform Vibe raised $4 million in a Seed round. Investors include Alchemy, Algaé Ventures, and P Nation. The platform allows users to turn non-fungible tokens into apps and products. 

Intellectual property

Artifact Labs, which preserves cultural and historical events on the blockchain, raised $3.25 million in a round led by Blue Pool Capital. Animoca Brands’ Animoca Ventures participated in the round. The startup plans to use the funds to expand its team, hiring developers specifically. 

Noted investors

ChatGPT CEO Sam Altman and former Stripe executive Lachy Groom co-led the first Seed round of Meanwhile Insurance Bitcoin, which raised $19 million in two steps of the Seed round. Altman has previously invested in Context, the developer of “the first social feed for Ethereum,” and TipTop, a consumer finance solution for an emerging web. Lachy Groom’s portfolio features Context and Entrepreneur First, a platform that allows users to build startups from scratch.

Gradient Ventures led the second Seed round of Meanwhile Insurance Bitcoin. The Mountain View-based venture fund’s portfolio includes Spectral and BlockJoy. 

Bitkraft Ventures was the lead investor in Karate Combat, which raised a total of $18 million. 

Bitrakft is a global investment platform that focuses on web3, gaming, and immersive technology. Its portfolio includes Epic Games, Avalon, Discord, Immutable, and other noted companies. 

DWF Labs led the Strategic round of the web3 gaming ecosystem RACA, which received $16 million. The VC firm also acquired an unspecified amount of RACA tokens as part of the deal. DWF Labs is a digital asset market maker and multi-stage web3 investment firm. It has offices in Switzerland, Singapore, the British Virgin Islands, the United Arab Emirates, South Korea, and Hong Kong. DWF Labs’ portfolio features such startups as Yield Guild Games, Fetch-AI, and The Open Network (TON). 

Fails

The second quarter of this year was relatively calmer than the first one. However, the crypto community still faced several problems, which occurred mostly due to hacks. 

In April, one of MetaMask’s third-party providers was hacked, exposing users’ personal information. The incident might have affected approximately 7,000 users who submitted customer service tickets between August 1, 2021, and February 10, 2023. 

In June, the Twitter account of OpenAI’s CTO, Mira Murati, was reportedly hacked. The attacker promoted a cryptocurrency called “$OPENAI” on the Chief Technology Officer’s profile. 

Following this, influencer Bitboy Crypto’s Twitter account was hacked to promote anti-SEC scam tokens. The blogger lost approximately $1 million.

On June 15, stablecoin USDT depegged from the US dollar. The coin’s price reached a local low point of $0.997. At the moment of writing, USDT is worth $1 on different platforms. 

Conclusion

In the second quarter of 2023, the ongoing bear market still affects the fundraises. While 2021 and 2022 saw large sums of money invested in various categories, this year VC firms are cautious, investing a maximum of $19 million in a project.

The gaming category remains of VCs’ interest; 20 startups have attracted $115,100,100 in funding. The industry is followed by three social network projects, which received $29 million, and seven payment startups, which raised a total of $25,750,000. 21 non-fungible token startups, even though not as “hot” as in 2022, managed to raise $72,816,000. 

Overall, the web3 sector raised $367,955,000 in the second quarter of 2023. 

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