We saw a 66% increase in total funding amount and a 240% increase in the number of deals announced in May compared to April. That being said, total Web3 game investments are still down by 37% compared to February.

It is fair to say that market uncertainty continues to make many VCs cautious about where they allocate their funds in 2023. A point that is not helped by the fact we are yet to see a Web3 breakout success.

However, I find it encouraging to see so many more deals being announced (relatively speaking). May represents the highest number of deals since August and suggests that although round sizes are shrinking, there is still interest from institutions.

Moving forwards, I wouldn’t be surprised to see average valuations and early-stage round sizes continue to shrink relative to what we saw in 2022. It is also likely that H2’23 will be when many teams that raised in late 2021/early 2022 are pressured to raise again and reduce team size in order to extend runways.