The world’s most active Web3 investor and accelerator, London-based Outlier Ventures, has laid off roughly 20% of its staff, according to three people with knowledge of the decision, another sign of fading enthusiasm for the once-hyped sector.
The layoffs come after an earlier, smaller round of layoffs last November, Sifted’s sources say. The full OV team was told in an all-hands meeting on Tuesday.
OV has invested in over 200 companies globally through its accelerator programmes, according to its website, including Fetch.ai, Secret Network and Brave Browser. The investor has counted celebrities like Snoop Dogg and Deadmau5 as advisors and corporates like Farfetch as accelerator partners, calling itself the “Y Combinator of the metaverse.”
“Despite encouraging developments in the wider crypto market, venture capital invested into Web3 has been down month-on-month throughout 2023, now at 2018 levels,” a spokesperson for OV says. “This naturally means we need to recalibrate the volume of startups we accelerate over the next six months, and therefore the organisation, whilst still maintaining the industry-leading service standards that our founders and partners come to us for. This also enables us to scale volume back up when markets inevitably recover.
“We recognise the significant contributions our employees, and those impacted, have made to founders' lives, and the chance of success for the 250 startups we have backed.”
A downturn in Web3 funding
Web3 — which refers to a new generation of blockchain-powered businesses that embrace decentralisation and democratising ownership — gained widespread interest from founders and investors starting in 2021, when tech like non-fungible tokens (NFTs), tokenisation and the metaverse was all the rage. Yet the sector has seen a significant decline in recent months; according to Crunchbase, Web3 startups raised just $3.6bn globally in the first six months of 2023, down 78% from the same period a year earlier.
Sifted sources say the layoffs were likely a result of an over-aggressive expansion of OV’s programmes in recent months, despite the slowdown in Web3 and wariness of crypto projects in the wake of the collapse of exchange FTX last year. One person says it's also become harder to find partners for OV’s accelerator programmes.
In the first quarter of this year, OV did 42 Web3 investments, compared to 14 made by the second most active Web3 VC, Coinbase.
