Funding Rebounds While Markets Dive
Funding rebounded this week despite drawdowns across crypto and traditional markets. Total weekly funding rose from $103M to $312M, with all sectors seeing increased funding except for DeFi and Mining. Infrastructure and Web3 & NFTs were the top funded verticals, raising $152M and $73M, respectively, while Mining has gone two straight weeks without funding. CeFi deals totaled $20m, showing signs of life after no CeFi deals closed last week.
Infrastructure had the most deals of any sector, with 12 out of 27 announced. Most of the funding in this category came from Ethereum L2 Scroll, which announced a $50 million raise at an eye-popping $1.8 billion valuation, despite not having a live mainnet. We dive deeper into this deal below as our deal of the week.
Many of the deals announced this week likely had already reached the final stages before wider market panic set in. The next few weeks of deal-making will potentially show how risk appetite could evolve for the rest of the year.
Deal of the Week
This week’s Deal of the Week is Ethereum Layer 2 scaling solution, Scroll. Scroll is a Layer 2 blockchain that uses zero-knowledge technology to help Ethereum achieve scalability. We discuss zk-tech in depth in our Crypto Concepts piece released earlier this week. Scroll raised $50 million in a round that included Polychain Capital, Sequoia China, Bain Capital Crypto, Moore Capital Management, and Variant Fund, among others. This is Scroll’s third round, bringing its valuation to $1.8 billion. Scroll plans to use this capital to continue building, launch its mainnet, and grow its ecosystem.
Why is this the Deal of the Week?
ZK-tech is one of the most interesting technologies in crypto today due to its ability to improve scalability, privacy, and security. Scroll leverages zk-tech to scale Ethereum, which currently has relatively high gas fees and transaction times. As a zk-rollup, Scroll processes transactions off-chain and then posts the transaction summary data back to Ethereum layer-1, increasing efficiency and lowering user costs. Scroll’s zkEVM (zero-knowledge virtual machine) has EVM equivalence meaning any EVM-compatible smart contract can easily be deployed on its network. This EVM equivalence will make it seamless for crypto developers on Ethereum Layer 1 to build applications on Scroll. Scroll launched its zkEVM on the Goerli testnet last week as it moved out of its pre-alpha testnet phase. Scroll will compete with several Ethereum scaling networks using zk-tech, such as Polygon, zkSync, and Starkware
Selected Deals
Cubist is an infrastructure-based platform aiming to provide a suite of security-related tools for Web3 application developers. The platform’s first step in accomplishing its goal is building a software development kit (SDK). The platform has secured $7M in funding through its seed round led by Polychain Capital. In addition, the funding round included investor participation from Polygon, Blizzard, Amplify Partners, and Dao5. Cubist intends to use the capital raised for workforce expansion and fast-tracking product development.
Hexa is an infrastructure-based company providing users access to an immersive 3D visualization platform. The company plans to utilize this technology to bring objects into the metaverse. The platform has secured $20.5M in funding through its Series A round. The funding round also included investor participation from Samurai Incubate, Point72 Ventures, HTC, and Sarona Partners. Hexa intends to use the capital raised to support product development.
Proven is an infrastructure-based platform aiming to increase transparency through cryptographic tools. By utilizing zero-knowledge proofs, the platform can provide asset managers, custodians, and digital asset exchanges with the ability to prove solvency to their clients/users. The company has secured $15.8M in funding through its seed round led by Framework Ventures. In addition, the funding round also included participation from angel investors Ada Yeo, Balaji Srinivasan, and Roger Chen. Proven intends to use the capital raised for workforce expansion and scaling its technological infrastructure.
Mauve is an infrastructure-based platform aiming to become the world’s first decentralized exchange that complies with traditional finance requirements. The platform plans to accomplish this by requiring extensive compliance checks for new users. The company has secured $15M in funding with investor participation from Brevan Howard Digital, Coinbase Ventures, BlueYard Capital, FinTech Collective, and others. Mauve intends to use the capital raised to increase global adoption of the exchange.
Kresus is a Web3 & NFT-based platform aiming to increase the adoption of digital assets. The platform plans to accomplish this by building an application that allows users to store, mint, and trade tokens. The company has secured $25M in funding through its Series A round led by Liberty City Ventures. In addition, the funding round included investor participation from Craft Ventures, Franklin Templeton, JetBlue Ventures, and others. Kresus intends to use the capital raised for workforce expansion, product development, and establishing partnerships.
