---
title: "Web3 in SaaS Clothing"
description: "Discover why web3 startups are pivoting to SaaS models in 2023, as funding drops 73%. Analysis of market dynamics driving B2B transformation in web3."
categories: ["web3","trends","SaaS"]
keywords: ["Theory Ventures","Tomasz Tunguz","web3","SaaS","venture capital","B2B software","blockchain technology","cloud computing","startup funding"]
ai_summary: "Explore how web3 startups are transitioning to SaaS models amid a significant funding decline in 2023."
date: 2023-06-08
lastmod: 2026-07-28
canonical_url: https://www.tomtunguz.com/web3-in-saas-clothing/
author: "Tomasz Tunguz"
---

In the mid-2010s, every web1 company became a web2 company. This time it's different. Many web3 companies will become web2 companies, too. 

Why will web3 companies dress like SaaS mutton?

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/t2vu5g3fvhlzb1p2xkfa.png)

If the current pace continues, web3 startup fundraising will fall by 73% in 2023. The absence of those dollars will flatten & shrink the already [modest addressable market for web3 software & infrastructure.](https://tomtunguz.com/sizing-web3-b2b-market/)

Web3 software & infrastructure companies yearning to thrive will need to look beyond the web3 buyer base to new markets with larger willingness to spend. The cloud (web2 software & infrastructure) has captured 40%+ of a $1.5t annual spend on software. 

Those billions are the future of web3 startup growth.

Web3 has created novel technologies that custody data, enable faster & more secure ways of moving money, guarantee provenance, & enable proofs of many things (identity, funds, insurance, presence to name a few).

But web3-to-web2 sales must be the future for companies to scale. 

In that transition, web3 software & infrastructure companies will shed their language of wallets, blockchains, & tokens for terms most buyers understand : accounts, databases, & credits. 

Web3 startups will sell software to web2 buyers & in the process become web2 SaaS businesses with unique & defensible architectural advantages & a different capital structure.