Tech investor predicts more web3 startup crashes in 2023

Fred Wilson, tech investor and co-founder of Union Square Ventures, reveals his outlook for 2023. While he thinks web3 startups will still struggle, he’s bullish on ETH projects. 

In his Jan. 1 blog post, Wilson predicts that as inflation declines and the global economy cools, central banks will lighten up on their current tightening measures in the first half of 2023. According to him, interest rates will level out in the first half of 2023. Moreover, he insists on a “soft landing” or a slight recession.

Due to the cooldown, in 2023, web3 startups will face certain difficulties. Many of them already experience losses and will require funds in 2023. Therefore, a surplus of startup businesses will be seeking funding this year. However, Wilson thinks that the projects which already have real token economics and ship new features quickly will attract new interest.

Wilson is especially bullish on large web3 caps like bitcoin and ethereum projects that will do well in 2023, per his vision:

“I am more bullish on ETH personally because it has the best underlying economic model of any web3 asset.”

Fred Wilson, tech investor

However, investors still need to be careful with investing in web3 in 2023, as the turbulence will remain in the crypto market:

“While there are compelling values out there in web3, I am not convinced that it is safe to go back into the water just yet unless you have a very strong stomach and a very long time horizon.”

Fred Wilson, tech investor

Web3 ecosystem had a lot of difficulties in 2022, including expensive cyberattacks and several high-profile bankruptcies. These issues further hindered an already challenging macro climate that affected the larger tech sector. Crypto winter led to significant layoffs and other cost-cutting measures implemented by numerous companies, including even moguls such as Coinbase and Crypto.com.