A strong product-market fit and real user adoption—that’s what web3 startups must show to investors.
Of course, this doesn’t mean that you don’t need to worry about your team, business model, or pitch deck—you need to. This means that after the 2021 NFT/DeFi bubble with many scam projects and “rug pulls”, investors want to see that your web3 startup solves a real problem for real users, all topped with security, scalability, and sustainable growth.
Web3 funding in 2025 continues to stabilize. Compared to rocky 2023, VC numbers in 2024 showed that investors are willing to back web3 startups but on certain conditions. VCs have learned from their past mistakes and now seek more solid foundations.
That’s why web3 companies should think more like web2 businesses—focus on a strong MVP, user traction, GTM strategy, and scalable business model. Not less important is the competitive moat, team experience, and regulatory compliance. Thus, if you want to fundraise and scale, you must be fully prepared.
In this article, we’ll dig deeper into what the web3 funding ecosystem holds for startups in 2025, where founders can raise money, and what investors expect from your business. Also, we’ll break down some real-world case studies on top web3 companies to see what startups can learn from them.
Let’s dive in!
The state of web3 funding in 2025
Fingers crossed, web3 VC funding will keep stabilizing after a rocky 2023.
VCs aren’t rushing to back web3 startups as they used to during the 2021 boom, but they are definitely not holding their pockets closed as in 2023. According to Crunchbase data, over $2 billion flew to web3 startups via 300 deals in Q3 2024. To compare, the amount in Q3 2023 was only $1.4 billion. Thus, we see a 43% increase.
However, the fact that the number of deals dropped isn’t very good (in Q1 2022, there were 1,200 deals). This means that fewer web3 startups will raise funding, which, in turn, means that when these companies decide to search for their next rounds, there will be fewer candidates to invest. Such a situation may be a result of the web3 industry entering a new era—the era of stabilization—where VCs are getting more selective.
Despite the situation with the number of deals, there are good signs that web3 funding will become more accessible in 2025. One of these signs is that the SEC has approved Bitcoin ETFs. Investors have rushed to these funds, making crypto more mainstream and potentially creating more funding opportunities for crypto startups.
Thus, web3 VC funding is gradually bouncing back after the recent low, giving web3 companies more faith in getting funded. But are VCs the only source from which web3 and crypto startups can raise capital? Of course not. We’ll cover other options down below.
How can web3 startups raise capital?
Compared to traditional startups, web3 companies may have more options where they can get funding.
1️⃣ Venture capital & angel investors
Of course, web3 startups may take a traditional path—venture funding. Some of the best web3 crypto VCs are a16z Crypto, Pantera Capital, Multicoin Capital, and Paradigm. Venture investors typically get tokens instead of traditional equity. Also, if you choose this way, be ready for tough due diligence and pressure to scale.
Pros & Cons
✅ VCs can write big checks.
✅ They also give strategic support.
❌ You lose control as investors will influence business decisions.
❌ Tokens may get locked up (a vesting period), and this limits liquidity and flexibility.
2️⃣ Accelerators & incubators
If you look not only for money but also for mentorship and networking, you may get into an accelerator or incubator program. They typically last 3-6 months and end with a demo day—time and space for web3 startups to pitch to investors. Some top web3 accelerators and incubators are Outlier Ventures, a16z Crypto Startup School, and Binance Labs Incubator.
👆 Note: Some of the top web3 companies started their journey with an accelerator. Take OpenSea, for example; this startup went through the Y Combinator accelerator in 2018.
Pros & Cons
✅ You get money fast.
✅ You have mentorship and support.
✅ You also get access to networking.
❌ You lose equity or tokens—just like VCs, accelerators also take a percentage.
❌ It may be hard to get accepted, given the high competition.
3️⃣ Grants
If you’re not ready to give your equity or tokens, think about grants. Some blockchain networks offer grants to web3 startups that build on their platform. These are Ethereum Foundation Grants, Avalanche Multiverse, or Solana Grants.
👆 Just note that grants aren’t a long-term funding strategy. It’s a good starting point, but if you plan to scale, you will need to think about other options later on.
Pros & Cons
✅ You don’t lose equity or tokens.
✅ You get technical and network support.
❌ Web3 funding is limited here—grants are typically $10K-$500K.
❌ There are strict regulations.
❌ It can take you months to get approved.
4️⃣ Decentralized autonomous organizations (DAOs)
Similar to traditional startups’ crowdfunding, there are DAOs for web3 startups—community organizations that pool funds from members and then decide where to invest this money through voting. DAOs don’t always ask for tokens; instead, they may ask for governance rights or future partnerships. Examples of DAOs are MetaCartel DAO, BitDAO, and FlamingoDAO.
Pros & Cons
✅ You don’t rely on VCs or banks (decentralized fundraising).
✅ Investors become strong supporters of the project.
✅ The distribution of funds is flexible.
❌ It needs time for all the members to vote, which may delay funding approval.
❌ Community funding may fluctuate, given market hype.
❌ Many DAOs are unregulated, which increases the risk.
5️⃣ Token sales (ICOs, IDOs, STOs)
This is the most native route to get web3 funding. You just sell your own tokens to investors and retail buyers before or after you launch your product. There are three ways you can do it:
➡️ Initial Coin Offering (ICO)—a direct sale of tokens—you’re selling your tokens directly to investors before launching your product.
👆 Note: This method was very popular in 2017-2018 but then became heavily regulated and, in some countries, even banned due to scams.
➡️ Initial DEX Offering (IDO)—a token sale on a DEX—you’re launching your tokens on a decentralised exchange (DEX) like Uniswap or Binance Launchpad. This method is best for DeFi projects and NFT platforms.
➡️ Security Token Offering (STO)—you’re launching tokens that are backed by real assets like company equity or real estate. STOs follow legal securities regulations, which make them safer for investors.
Pros & Cons
✅ You don’t lose equity.
✅ You can fundraise fast.
✅ Investors become users, and this helps with early adoption.
❌ You may face heavy regulations.
❌ The price volatility is high.
❌ Many buyers flip tokens for a quick profit, which can hurt your web3 company’s stability.
💡 A hint: A smart move is to use a mix of funding sources. For example, you may use grants for development, IDO for liquidity, and then VC for scaling.
What do investors expect from web3 startups?
After we’ve found out where to get web3 funding, let’s talk about how to secure it. In other words, how to make your startup enter the league of top web3 companies (or top crypto companies, depending on your idea focus).
Here are the aspects investors often look at when deciding whether to invest in a web3 company or not:
1. A founding team and their expertise
When investors speak about web3 startups, they typically focus on whether a team has experience working with web3 technology. Also, your team must know how to build and scale web3 projects, which is not so easy.
💡 Related read: Why your pitch deck’s team slide is the most important one
2. Product-market fit
Surely, product-market fit matters for each startup. But, in the web3 world, it’s especially important. The point is that hype and speculation can create a false demand in this industry, as happened during the bull markets of 2021-early 2022. Many web3 startups that raised millions without any real user demand failed as soon as the hype died.
That’s why now investors are more cautious when choosing which web3 or crypto startup to back. They want to see that there’s real usage beyond speculation.
Take a look at Polygon, for example—one of the best web3 and crypto companies in the world that has solved Ethereum’s problem with scalability. It built a Layer 2 scaling solution to serve more transactions, complete them faster, and cut gas fees.
3. Business model and revenue potential
Investors want to see that your web3 company can make money and scale so they’ll get their returns in the future.
That’s why VCs look at:
➡️ How your startup generates revenue—Do you earn money from transaction fees, staking, NFT sales, etc.?
➡️ Whether your business model is sustainable—Does your business have a steady income stream or rely on token sales and hype?
➡️ Whether your business is scalable—Can your infrastructure handle a 10x user increase? And what about 1000x?
4. Competitive moat
Web3 is crowded. That’s why VCs want to invest in startups that can really stand out—the ones that have a clear edge over competitors. Be ready to show and explain to investors what makes your web3 startup unique, whether your technology is defensible, and whether your user adoption rates are high.
The biggest crypto companies became leaders because they had something that could set them apart—a better tech, a stronger user base, or a unique product. Just show investors which secret sauce YOU are going to use.
💡 Related read:
1. How to build your competitive moat
2. How to make a winning competition slide for your pitch deck
5. Regulatory and security risks
The world of web3 is still shaky. Past fraud cases like FTX and Terra (LUNA) have squeezed regulatory belts. Investors don’t want to fear their investments will disappear due to lawsuits or hacks. That’s why now they double-check everything—where your web3 company is based (is it a crypto-friendly region or not?), if your smart contracts have been audited, and whether you’re playing by SEC, EU, or other rules—before even thinking about writing you a check.
6. Tokenomics
Investors may also look at tokenomics. If a web3 startup issues tokens, VCs want to know that its economic model will survive in the long run. To see this, they typically check token utility, supply and demand mechanics, and vesting schedules.
Case studies: How top web3 companies raised funding
All of the above was more about theory. Here, let’s talk practice and check the journeys of top web3 companies.
🏆 OpenSea—a web3 startup that made NFTs mainstream
The profile:
OpenSea is the largest peer-to-peer NFT marketplace in the world. It allows users to buy, sell, and trade digital assets across multiple blockchains. OpenSea was launched in 2017 by Alex Atallah and Devin Finzer.
How OpenSea raised web3 funding:
2018: OpenSea raises $2 million from Founders Fund and crypto VCs. The web3 startup uses this money to develop the marketplace and onboard team members.
2021: It’s NFT bull market, and the company first secures a $23 million Series A round led by Andreessen Horowitz and then wins a $100 million Series B round (also led by a16z). The founders decide to use these funds to scale infrastructure, improve UX, and span more blockchains (Polygon, Solana).
2022: The time of peak valuation—$13.3 billion—and raising $300 million Series C from Paradigm & Coatue. This money is for improving security, user support, and launching a developer grant program.
2023: This is when the market starts to correct, which makes OpenSea’s valuation go down by 90% ($1.4 billion). This situation shows how volatile web3 investments can be.
Why OpenSea is a top web3 company:
OpenSea was one of the first NFT marketplaces—this web3 startup proved to have a strong product-market fit and competitive moat.
The company scaled smart—all the raised funds were used for important things like reducing gas fees, expanding blockchain integrations, and improving security and UX.
OpenSea successfully adapted to market trends—although it capitalized on NTF hype (2021), the company managed to expand beyond Ethereum.
This web3 startup built a strong community—a mix of crypto traders, artists, and celebrities made OpenSea the default NFT platform.
When you look at the business journey of OpenSea, you’ll see that timing really matters, scaling needs money (not all web3 funding options can help you scale), it’s very important to diversify, and the web3 market is super volatile (no wonder investors are so careful now).
Among other top crypto and web3 companies are:
🏆 Story Protocol that secured $80 million Series B at a $2.25 billion valuation in 2024;
🏆 ID Planet with its $80 million Series B funding;
🏆 Yellow Card, an African crypto startup that got $33 million in Series C in 2024;
They all show that web3 funding is recovering after tough times, and startups can get a slice of it if they prepare well enough.
Wrap-up on web3 startup fundraising
Although web3 funding is neither dripping as in 2023 nor pouring as in 2021, being just more stable, startups may still struggle to raise capital. Investors are more selective; they aren’t easily caught by the hype anymore as it was during the 2021 boom. VCs ask for proof of real market demand, user traction, sustainability, and scalability. They also carefully examine how expert and experienced your team is in terms of web3 technology.
If you feel overwhelmed with so many details, take our VC quiz and let’s see how well-prepared your web3 startup is for fundraising.
FAQs
Are VCs still investing in web3 startups?
Yes. Although investors have become more picky after the scams and “rug pulls” in 2021, they can open their pockets and give money to web3 startups that can show real market demand, user traction, scalability, and sustainability.
What is an IDO?
An IDO (Initial DEX Offering) is when you launch your tokens on a decentralized exchange (DEX) like Uniswap or PancakeSwap to raise web3 funding. This may be a good fundraising option as it’s fast, cheap, and gives you instant liquidity, but the token prices can be very volatile.
If I have a web3 startup, how can I acquire users?
If you want to acquire users, pay attention to how you market your product (leverage personal [branding](/blog/startup-branding/) , build a community, etc.), which channels you use (for example, X, Reddit, Discord), and whether it’s easy for people to start using your product.
Which blockchain should I build on: Layer 1 or Layer 2?
Of course, everything depends on your business needs. But, typically, web3 startups go with Layer 2 (Polygon, Arbitrum, Optimism) because it’s faster and cheaper. Yet, it’s important to note that Layer 1 (Ethereum, Solana, Avalanche) gives full decentralization.