Web3 Funds Load up on Dry Powder
Despite a cold start in the first week of 2023, funding has ramped back up, increasing from just $7M in the first week of 2023 to $65M and $186M in the last two weeks, respectively. The majority of this funding came from Web3 and NFTs, which accounted for roughly $80M each week. There were also four Web3 and NFT related venture funds the past two weeks, totaling a massive $1.85B in funding. The largest of these funds was Venum Venture Funds (VVF), which raised $1B. VVF was founded by the Venom Foundation and Iceberg Capital and is planning to invest in pre-seed to Series A rounds for Web3 protocols and other decentralized applications. The fund is led by Peter Knez, ex-CIO of Blackrock and former global CIO for fixed income at Barclays Global Investors. Another large fund raised this week was HashKey Capital’s third fund (Fund III) with a total commitment of $500M. This fund will focus on on both Web3 as well as crypto infrastructure. Other Web3-related funds raised this week were Sequoia Seed Fund V and Escape Velocity Fund I. Aside from Web3 & NFTs and infrastructure, the other sectors lagged the past two weeks. DeFi and CeFi only received $10M and $3M, respectively the past week and Metaverse & Gaming had no funding the first two weeks and only $10M of funding this week.
Similar to 2022, most 2023 deals have remained in the early stages. 44% of deals this week were Seed Round, and 12% were Pre-Seed.
Deal of the Week:
Nil Foundation (written as =nil; Foundation), the database management systems and applied cryptography development company, raised $22 million in a round led by Polychain Capital. Other investors included Blockchain Capital, StarkWare, and Mina Foundation. The type of deal was undisclosed but valued Nil Foundation at $220 million. The funds will be used to keep rolling out its proof market protocol and improve the speed, security, and reliability of data on blockchain networks.
Why is this the Deal of the Week?
Nil Foundation is the developer behind Proof Market, which enables blockchains and protocols to outsource the development of zero-knowledge (ZK) proofs. ZK proofs are an increasingly popular cryptography technique that can verify the validity of a given statement without revealing the contents of the statement. Nil Foundation is looking to capitalize on the increasing demand for ZK code by building their Proof Market, a decentralized marketplace ZK proof development.
Developing ZK proofs is costly, time-consuming, and resource-intensive, so many protocols still rely on centralized entities for proof development rather than doing it in-house. Nil Foundation will alleviate this problem by allowing protocols to list their proof requirements and then facilitate proof generators stepping in without protocols needing to formally hire someone or dedicate existing resources to the task. Commoditizing code development is yet another sign of the world’s increasing digitalization and Nil Foundation is positioning itself to be right at the center of that world.
Selected Deals
Week of 1/13/23
Quasar Finance is a decentralized finance (DeFi) based protocol built on the Cosmos ecosystem. The platform aims to offer users investment products such as staking. The company has secured $5.4M in funding through its seed round at a $70M valuation. The funding round was led by Shima Capital with investor participation from Blockchain Capital, HASH Capital, Polychain Capital, and others.
Easy Company is a Web3-based platform aiming to increase mainstream adoption by introducing a social crypto wallet. The company has secured $14.2M in funding through its seed round, with investor participation from Relay Ventures, Tapestry VC, 6th Man Ventures, Lobby Capital, and others. Easy Company intends to use the capital raised for product development.
CyberX is a centralized finance (CeFi) based platform that focuses on providing market-making services for its users within the digital asset industry. The company has secured $15M in funding through its Series A round led by Foresight Ventures. CyberX intends to use the capital raised to develop its risk management framework further.
Alkimiya is a decentralized finance (DeFi) based protocol built on the Avalanche ecosystem. The platform aims to offer decentralized capital market services for its users, such as hedging. The company has secured $7.2M in funding in a round led by Castle Island Ventures and 1kx. In addition, the funding round included investor participation from Coinbase Ventures, Dragonfly, Circle Ventures, and others. Alkimiya intends to use the capital raised for workforce expansion.
Week of 1/20/23
Plai Labs is a Web3-based platform aiming to increase the onboarding process for new users entering the space. The platform plans to accomplish this by using artificial intelligence to promote engagement. The company has secured $32M in funding through its seed round from Andreessen Horowitz (a16z). Plai Labs intends to use the capital raised for workforce expansion and product development.
Metahood is an infrastructure-based platform aiming to provide a place that allows users to buy and sell virtual real estate. The company has secured $3M in funding through its seed round led by 1confirmation. In addition, the funding round also included investor participation from Flamingo DAO, Neon DAO, Volt Capital, and others.
Syky is a Web3-based platform aiming to create a community and marketplace for users that focuses on the fashion industry. The platform plans to release an NFT that will provide access to in-person and digital fashion events. The platform has secured $9.5M in funding through its Series A round led by Seven Seven Six. In addition, the funding round included investor participation from Leadout Capital, First Light Capital Group, Brevan Howard Digital, and Polygon Ventures. Syky intends to use the capital raised for workforce expansion and product development.
Createra is a Metaverse-based platform aiming to provide its users with the ability to distribute and create games efficiently. The platform plans to accomplish this through its cloud-based web engine. The company has secured $10M in funding through its Series A round led by Andreessen Horowitz (a16z).
Ulvetanna is an infrastructure-based platform with a focus on cryptography. The platform plans to develop hardware that accelerates the generation of zero-knowledge proofs (ZKPs). The platform has secured $15M in funding through its seed round at a $55M valuation. The round was co-led by Paradigm and Bain Capital Crypto. In addition, the funding round also included investor participation from Jump Crypto.
Reports you may have missed
WEEKLY RECAP Despite a short week in observance of Good Friday, weekly funding rose 17% from $228 million to $268 million across 31 deals. March funding totaled $960 million (with three days remaining), representing the highest figures since March ’23. Monthly deal count has reached 142 thus far, similarly marking the highest tally since 2022. Gaming companies had a strong week of funding, raising $114 million, being slightly edged out...
WEEKLY RECAP March continues to be an impressive month for the crypto private market. Total funding reached $228 million across 32 deals, marking the third consecutive week with over 30 deals. Average deal size has slowly been increasing. This week’s average deal amount was $10.9 million. For comparison, 2023’s average deal size was $9.2 million, representing an 18.4% increase. DeFi was the leading category from a deal count perspective, representing...
WEEKLY RECAP Crypto funding continued to show strength through the first half of March, with $252 million in total funding across 38 deals, marking a 41% week-over-week funding increase. The infrastructure category represented approximately two-thirds of funding and almost half of total deal count, including a $69 million undisclosed round from Berachain, an EVM-compatible L1 network powered by proof-of-liquidity. The round was co-led by large TradFi asset manager Brevan Howard and...
WEEKLY RECAP Funding through the first week of March was strong, rising 10% from $162 million to $177 million. Total deal count fell 23% but was still impressive, with 31 deals. Infrastructure remains the dominant category, representing 85% of total fundraising and 61% of the deal count. DeFi tallied 26% of the deal count this week, including a $4.5 million strategic round by Blackwing, a modular blockchain for liquidation-free leverage trading....