Venture capitalist Tomasz Tunguz says that 57 web3 projects generated more than $500k in revenue in the last six months.

According to Tomasz, 103 web3 companies generated revenue on-chain in the last six months, with the smallest earning a few hundred dollars and the largest, Ethereum, earning $401 million. He went on to say that 44% of these companies made less than $0.5 million while  41 companies, a nascent mid-market, produced between $5- $25 million.

The average software company operates at about 70% gross margin, so let’s assume a web3 company is similar. To simplify, we’ll assume the typical web3 company spends all of that cost of goods sold (COGS) on software – about 30% of revenue [1].

He wrote in a blog post titled “Sizing the Web3 B2B Software Market.”

That implies the web3 B2B software TAM is roughly $231m in 2022 & $75m excluding Ethereum, which comprises roughly 60% of the revenue,he added.

Web3 software sales, according to Tunguz, must also navigate novel procurement processes with decentralized decision-making, payment in kind with tokens, and different permissions models for users.

At a 10x revenue multiple — which can be high or low depending on your view of web3 revenue growth — web3 software should support a startup market cap of $0.75 billion to $2.3 billion.

When it comes to the limited number of potential customers that web3 vendors face, Tunguz says that with fewer than 100 accounts willing to spend $20-50k on a software contract, every interaction is valuable, especially with the larger accounts that drive revenue.

Compared to web2, the venture capitalist claim that Salesforce has 150k customers in a market of about 650k who spend $57 billion annually, which is only for the web2 CRM market.

While it is possible to build a business selling solely to web3 firms, the larger market today is selling web3 technologies to web2 firms. “solutions in gaming, marketing, & financial services where decentralized databases or virtual wallets solve a core business need.” he added.