Venture Capital Moving From DeFi to CeFi
Key Takeaways
- The trend of massive investment into centralized finance ( CeFi ) and infrastructure projects continued over the past week. CeFi projects raised $430 million, and infrastructure raised $312 million, together making up 80% of this week’s $930 million of investments from venture capital. $167.5 million went into NFTs, and DeFi and gaming brought up the rear with $11.25 million and $7 million, respectively. Two new venture capital funds raised a combined $633 million for investments into gaming andinfrastructure.
- Active investors this week include a16z, Paradigm, Alameda Research, GSR, and Spartan Capital.
- Deal of the Week: FTX brought its valuation up to $32 billion after raising $400 million in a Series C that will be used mostly for M&A to help the company expand geographically and technologically.
Venture Capital Deals
Pixel Vault is a decentralized crypto media group and NFT development platform that created projects like PUNKS Comics using famous NFTs as the characters in their stories. The group raised $100 million in a round led by Velvet Sea Ventures and 01A. The funding will help Pixel Vault launch a multi-franchise NFT development platform that will allow users to own the digital content that appears in movies, comics, video games, and other forms of media entertainment. (NFT Platform Pixel Vault Closes $100M Investment)
Phantom is the leading Solana wallet that allows users to easily buy, send, and swap any tokens or NFTs in the Solana ecosystem. The company raised $109 million in a Series B round led by Paradigm with participation from Jump Capital, Solana Ventures, Variant, and a16z. The startup reached unicorn status, getting a valuation of $1.2 billion. Phantom is looking to hire in community support and product development lines of business to improve the project’s usability, as well as attracting more users and developers into Web3 projects. (Solana wallet Phantom raises $109 million in new funding, launches iOS app)
Astar Network is a Polkadot parachain that provides smart contract capability on the Polkadot ecosystem. The project closed a $22 million strategic funding round led by Polychain and Alameda Research, with Alchemy Ventures, GSR, and Crypto.com Capital participating, among many others. Astar awards developers for building Polkadot infrastructure upgrades and smart contract applications, which can then be integrated easily into the Polkadot ecosystem so that other parachains can take advantage of the smart contract infrastructure that exists on the Astar parachain. The main purpose of the funding is to expand its activity to a wider audience, geographically. (Polkadot Parachain Astar Network Raises $22M From Polychain, Alameda Research)
Chrono.Tech is an Australian blockchain service company that focuses on providing blockchain-based solutions for human resources departments. Chrono raised $30 million in a round led by Mark Carnegie and a European family office. The company currently has products for job searches, crypto payrolls, and workforce management, especially for connecting freelancers with companies who need to contract out product development. The fresh capital will be used to improve the company’s scalability and develop new products and services for an easier and more complete user experience. (Chrono.Tech Raises $30M to Develop HR-Focused Blockchain Products)
NFT3 is a virtual identity network that creates a decentralized identification (DID) for users to control their personal data in the form of NFTs. The company closed a $7.5 million seed round led by Animoca Brands, with participation from DFG, CMS Holdings, LD Capital, and Prometheus Labs Ventures. By pairing DIDs with NFTs, the network can anonymously keep track of history and actions, and the owner of the NFT has complete control over its distribution and usage. (NFT3 raises $7.5 million to introduce DIDs and NFTs to the metaverse)
Spin (SPFI) is a decentralized, multichain derivatives exchange that is currently running on the Solana testnet and is in the alpha stages on NEAR. The project closed a $3.75 million seed round led by Lemniscap, with GSR, Spartan Group, and ZMT Ventures participating, among others. The capital will help fund development of a complete derivatives product suite on both the Solana and NEAR networks. (Multi-chain crypto derivatives DEX Spin raises $3.75M)
ICHI is a stablecoin provider for DeFi projects that allows the projects to create stablecoins that are collateralized by their native tokens. The ICHI Foundation raised $7.5 million from Fundamental Labs, TRGC Limited, Lattice Capital, and Lightshift Capital, among others, in order to recruit more DeFi projects to use the ICHI protocol. By collateralizing native tokens for stablecoins, the projects have the ability to generate liquidity without selling their native tokens. Instead, the projects have their own ecosystem’s stablecoins that can be exchanged for USDC, keeping liquidity on the platform while maintaining the value of its native governance tokens. (Stablecoin-as-a-Service Project ICHI Raises $3.5M for Continued DeFi Expansion)
Trust Machines is a platform for creating a decentralized application (dApp) ecosystem on Bitcoin, similar to what exists with projects like Ethereum and Terra. The company raised $150 million from Breyer Capital, DCG, GoldenTree, Hivemind, and Union Square Ventures. Trust Machines was started by the co-founder of Stacks, a project that brought smart contract capability to the Bitcoin blockchain. The new venture is intended to build off of Stacks in order to bring developers that will create DeFi applications, NFTs, Play-to-Earn gaming, etc. on the largest, most decentralized blockchain. (Muneeb Ali’s Trust Machines Raises $150M)
Tribal Credit is a centralized financial services provider for small- and mid-sized businesses in emerging markets. The company closed an oversubscribed Series B fundraising round at $60 million. The round was led by SoftBank Latin America Fund, with participation from Coinbase Ventures, BECO Capital, QED Investors, and Rising Tide. Tribal Credit is using the capital to bring their cross-border payment service into the Latin American market. Tribal’s payment service allows vendors to be paid in their native fiat currency, while consumers pay in their own currency. In other words, Americans can pay for Mexican goods in USD, and the vendor will be paid in Mexican Pesos. (Tribal Credit raises $60 million in SoftBank-led Series B round)
Dune Analytics is a crypto data analytics platform that helps users find, process, and visualize blockchain data using the easy-to-learn data query language, SQL. The company raised $69.42 million in a Series B round, bringing it to unicorn status with a $1 billion valuation. The round was led by Coatue, with participation from Multicoin Capital and Dragonfly Capital, among others. Dune currently has over 10,000 analysts using its platform, creating over 100,000 real-time data pages, and the company hopes to use the fresh capital to pay high-quality analysts on the platform and bring its analyst base to over 1 million users. (Dune Analytics raises $69.42 million in Series B, now valued at $1 billion)
Launch House is a crypto development program that selects active developers and connects them with others in order to boost the speed at which startups and projects are created. The company raised $12 million in a Series A round led by a16z, with notable individual investors Mike Dudas, the founder of The Block, participating. Launch House is creating a similar dynamic to hacker houses in the early days of Silicon Valley, where developers get together in a house and churn out new products and ideas until they create something that takes off. The funding will be used to bring applicants to large houses in major cities like New York and LA, as well as create a new metaverse space for developers to stay in touch. (Launch House Raises $12M Series A for New Age Hacker Houses)
Galaxy Fight Club is a multiplayer online battle arena (MOBA) game built on Polygon that allows users to bring any Ethereum-based NFT and fight to earn rewards. The project raised $7 million in a seed round led by Animoca Brands, Sequoia Capital, and Skyvision Capital, with Spartan Capital, Rarestone Capital, and Infinity Ventures Crypto, among others. Galaxy Fight Club is designed as a game similar to Nintendo’s Super Smash Bros. franchise but includes a unique battle royale mode on top of regular deathmatch and team-based game modes. The main draw, however, is being able to integrate personal NFTs like CryptoPunks and Bored Apes and use them in a more interactive way. (Battling Blockchain Game Galaxy Fight Club Welcomes $7M Investment)
Crypto Capital Markets
Silvergate Capital is a venture capital firm focused on fintech and crypto startups. The company purchased the entire infrastructure of Facebook’s Diem project for $182 million and will be taking over its development, deployment, and operations. Diem, which started out as Libra, was an attempt by Facebook to develop a stablecoin that it could use to execute transactions on Facebook’s platform as well as in its metaverse project. Silvergate is hoping to finalize the project and launch its own stablecoin sometime in 2022 in order to use blockchain technology for real-world payments transactions instead of only being used in crypto trading. (Facebook cryptocurrency venture Diem sold for $182m)
FTX is in the process of acquiring Liquid, a Japanese crypto exchange that performs over $72 million in daily transactions. The acquisition creates a line of business through which FTX can participate in Japan with full legal and regulatory compliance. FTX is one of the largest global crypto exchanges that recently raised $400 million with a focus in acquisitions like this one to quickly expand the company’s territorial reach without regulatory backlash. (Crypto exchange FTX to buy Japanese rival Liquid for Asia expansion)
New Venture Capital Funds, Ecosystem Funds and Alliances
Entain is a British sports betting and gaming company that is the parent company of online gambling platforms such as bwin, Ladbrokes, and Coral. The company is starting a $133 million fund to invest in NFT- and metaverse-based sports projects. Entain is trying to get ahead of the curve and become a go-to provider of interactive entertainment and gambling in the fast-growing metaverse. (Entain to invest $133 million in NFT and metaverse innovation lab)
776 Management is a venture capital firm started by one of the co-founders of Reddit with early investments in crypto projects such as Axie Infinity, CoinTracker, and Lolli. The company just raised $500 million for two new funds that will primarily be used for investments in crypto. One fund will be a $300 million early-stage investment arm, and the other $200 million will go in a Series A and B fund. 776 is focusing its funding on supporting developers that it believes are properly solving existing problems to make the digital economy a more robust and complete technology. (Alexis Ohanian’s VC Firm to Focus on Crypto With $500M Capital Raise)
FTX is a centralized cryptocurrency exchange and is the parent company of FTX US, which was featured in last week’s Funding Friday. FTX finished a $400 million Series C funding round that valued the company at $32 billion. The round saw participation from Paradigm, Tamasek, SoftBank, Tiger Global, and the Ontario Teachers’ Pension Plan Board, among others.
Why is this a Big Deal
FTX is one of the largest and fastest growing exchanges in crypto, seeing a 60% increase in users and a 40% increase in trading volume since its last funding round in October. The company was valued at $25 billion in that October round, meaning FTX has boosted its valuation by $7 billion, almost 30%, in just 4 very active months. And FTX is making an effort to maintain that pace of expansion by focusing on East Asia and Latin America, two regions in which FTX has a limited exposure but have been eager to adopt the digital asset economy. As evidence of this effort, the company was featured earlier in this Funding Friday article for acquiring the Japanese crypto exchange, Liquid, in order to expand FTX’s coverage of the Japanese crypto economy. The fresh capital will be focused on more mergers and acquisitions, like the announcement to acquire Liquid. The other goal with the M&A strategy is to enhance the company’s product offerings and tech infrastructure through adopting and integrating entrepreneurial solutions to FTX’s product roadmap. (Crypto Exchange FTX Now Valued at $32 Billion With $400 Million Raise)
