One for the Record Books

Venture Capital Deals

Yuga Labs is an NFT/metaverse developer most widely known for creating the Bored Ape Yacht Club NFT collection, the largest NFT collection by market cap at over 1 million ETH (~$3 billion at the time of writing). Yuga raised $450 million in a funding round that valued the company at $4 billion. The round was led by a16z, with Sandbox, FTX Ventures, and MoonPay participating as well, among others. At the moment, Yuga Labs is developing a metaverse project, Otherside, which is expected to launch in April this year. The fresh capital will help fund the launch and further development of the Otherside platform, in order to allow players to integrate their NFTs into a virtual world, purchase and develop virtual land, play games, and hang out with other players in chat rooms. (Yuga Labs Raised $450M And Is Now Valued At $4 Billion)

Archway (ARCH) is a Cosmos-based protocol for incentivizing application development on the Cosmos network. Phi Labs, the Archway development team, raised $21 million in a seed round led by CoinFund and Hashed with participation from Blockchain Capital, Hypersphere, and Cosmostation, among many others. Archway supports decentralized applications (dApps), which the developers are free use to fund further work on the dApp, incentivize adoption without draining treasury reserves, etc. The capital will be used to build software development tools to make it easier to build dApps on Archway and increase tokenomics stability. (Cosmos Protocol Archway Raises $21M to Provide Developer Rewards)

Jeeves is an expense payment platform that offers multi-region corporate credit cards, bank-to-bank payment services, and venture revenue financing. The company raised $180 million in a Series C round led by Tencent with participation from a16z, Stanford University, and GIC, among others. The fundraising round quadrupled the company’s valuation to $2.1 billion. The Jeeves development team announced that they will use a portion of the funding to build the necessary infrastructure that would allow companies to use stablecoins in their money transfers, but most of the capital will be deployed into geographical expansion to SE Asia, Brazil, and MENA. (Expenses fintech Jeeves eyes crypto transfers as it raises $180 million)

Dave is a fintech app that is moving into crypto payments services through a partnership with crypto trading platform FTX US. On top of partnering with FTX US to be their payment services provider, Dave received a $100 million investment from FTX Ventures. The capital will help Dave build out infrastructure for transferring crypto tokens through their platform as well as integrating blockchain technology into their services to improve cost and time efficiency. (Mobile banking app Dave scores $100M investment from FTX US)

The TIE is a crypto data provider with their SigDev Terminal that tracks media attention surrounding customizable interests like specific protocols, basket categories, etc. The TIE received $9 million in a Series A funding round that valued the company at $100 million. The round was led by Blizzard and saw participation from Golden Tree, NYDIG, and the Gemini Frontier Fund, among others. The company announced that the capital will be focused towards building institutional solutions, data redistribution, and token relations verticals to further capitalize on its institutional client base. (Crypto data firm The TIE raises $9 million in Series A funding round)

Struct Finance is an Avalanche-based DeFi tooling project that is making tools for institutional investors to customize and build a variety of DeFi strategy products for their clients around varying risk-tollerance levels. The startup close a $3.9 million seed round that attracted participation from Blizzard, Skyvision Capital, Avalaunch, and Finality Capital Partners. Struct is falling in line with a series of new DeFi-centric projects that focus more on developing tools for investors to more easily interact with the DeFi space as opposed to being new DeFi protocols themselves. The idea is to provide investors with simple interfaces to process and keep up with the highly dynamic ecosystem where new projects rise and collapse within weeks. (Struct Finance raises $3.9M in seed round funding for structured DeFi products)

ClearBank is a cloud-based clearing bank that services over 200 financial institutions including Tide and Chip, as well as crypto giants like Coinbase and Gemini. The company raised $229 million in a funding round led by Apex Digital, with CFFI UK Ventures and PPF Financial Holdings participating among others. ClearBank is dedicating the funds mostly towards an expansion into Europe, but the company is also reserving a significant amount to develop new products and services. Some of the products on the roadmap include API-based interbank payment methods and multi-currency accounts. (ClearBank raises $229 million marking expansion push)

FanCraze is an Indian NFT marketplace for official cricket (the game) collectibles like game clips and historical moments in the sport’s history, similar to NBA Top Shot and SoRare. The company raised $100 million in a Series A round led by B Capital Group and Insight Partners with participation from Mirae Asset and Cristiano Ronaldo, among others. FanCraze is offering cricket fans the ability to invest in NFTs, a sport with a fanbase of over 1.3 billion people, through a variety of payment options, since adoption of crypto in India has been slow among the vast majority of its population.  (Cricket NFT Marketplace to Raise $100M in Series A Funding Round: Report)

Coinbooks is an accounting software provider that is trying to streamline the accounting methods for crypto companies and DAOs by integrating directly with crypto wallets to automatically track their cashflows. The startup raised $3.2 million in a seed funding round that saw participation from Y Combinator, Multicoin Capital, Lattice Capital, and Orange DAO, among others. Coinbooks plans to use the capital to expand its engineering and development team, test product-market fit, and increase scalability of its platform. (Coinbooks raises $3.2 million to build accounting software for DAOs)

Joyride Games is an infrastructure platform for game developers to build and operate blockchain-based mobile games. The company raised a $14 million seed and follow-on financing round. Investors in the startup include Coinbase Ventures, Animoca Brands, Solana Ventures, and Dapper Labs, among others. Joyride hopes to provide tools for the entire publishing and operation process like game testing, publishing support, analytics tools, and live operations management. If successful, these tools may further attract developers into blockchain and Web3 gaming by smoothing the transition and allowing them to reach gaming quality on par with AAA titles. (Web 3 Game Development Platform Joyride Raises $14M Ahead of Launch)

Ultiverse is a metaverse project that is working to connect blockchain applications with virtual reality worlds to allow users to import NFTs, play games, and develop virtual land acquired through a variety of blockchains and Web3 applications. The project raised $4.5 million in a seed round that valued it at $50 million. The seed round was led by Binance Labs and DeFiance Capital, with Three Arrows Capital and SkyVision Capital participating, among others. The Ultiverse team is planning to use the funding to help launch its virtual world in tandem with a virtual reality MMORPG game to initiate adoption of the platform. (Ultiverse to Expand Metaverse Offerings in BNB Chain Ecosystem With $4.5M Raise)

Joystream is a decentralized social media platform for creators to monetize their content through minting and selling their videos as NFTs. The company raised $5.85 million in a funding round that increased its valuation to $60 million. The round was led by DCG, Hypershpere, DeFi Alliance, and D1 Ventures. The funding will go towards a mainnet launch, creating a DAO governance system, and incentivizing content creators to join the platform. Joystream allows each creator to make a token for their channel, giving them full control over how to monetize their content, be it subscription, pay-as-you-go, NFT sales, etc. (Decentralized Creator Platform Joystream Raises $5.8M)

Red Door Digital is a Taiwanese Web3 gaming producer that prioritizes developing AAA-quality games above creative ways to gamify earning money. The company closed a $5 million seed round that saw participation from M6, Shima Capital, and Maven Capital, among others. The RDD team believes that Web3 gaming is currently lagging in adoption because games are only being designed to go viral instead of being high quality games that would attract mainstream gamers for a more sustainable growth of the space. The company has three games in development, and is planning to release their first game, Reign of Terror, sometime this summer. RDD is also trying to diversify its income stream by building legitimate game theory models to govern in-game economies and license that infrastructure to other developers. (Taiwan’s Red Door Digital Raises $5M to Build AAA-Games for Web 3)

Block Tackle is a metaverse gaming studio that is currently developing its first game, SkateX, where players purchase skateboard NFTs and use them in-game or collect them for resale. The company raised $5 million in a seed round led by Play Ventures and Cadenza Ventures with participation from Animoca Branches, Coinbase Ventures, and Solana Ventures. Block Tackle will use the funds to launch SkateX in April along with their first NFT skateboard collections, as well as fund the initial stages of other projects. (Animoca, Coinbase Ventures Back $5M Seed Round for Metaverse Gaming Studio Block Tackle)

Upshot is an NFT appraisal protocol that offers an API for developers to integrate real-time pricing data into their projects, along with providing appraisal data developed to help properly compare collectibles. The project raised $22 million in a Series A extension from Polychain Capital. The capital boost will help Upshot fund R&D for pricing models, hiring more staff, and development of new tools on the roadmap like a DeFi algorithm product. Previous investors in the original Series A included Delphi Digital, CoinFund, and Slow Ventures, among many others. (Polychain Capital Leads $22M Investment in NFT Appraisal Protocol Upshot)

Ribbon Finance (RBN) is a crypto structured products startup that creates a simple interface for investors to participate in covered call DeFi strategies with an automated backend. The company was given $8.8 million from Paradigm in a partnership between the two companies to build new risk products, further scale the protocol’s infrastructure, and build out multi-chain investing methods. At the moment, Ribbon is deployed on Avalanche, Solana, and Ethereum, but they are focused on integrating with more blockchains over the next 6 months. (Paradigm Invests $8.8M in DeFi’s Ribbon Finance)

Token Sales

C2X (CTX) is a Web3 gaming platform on the Terra blockchain with 7 games launched or in development. The startup raised $25 million private token sale included investments from FTX Ventures, Animoca Brands, and Jump Crypto, bringing the company’s valuation up to $500 million. C2X is also planning a public token launch in the near future to integrate tokenomics, an NFT marketplace, and wallets into their gaming ecosystem. This is one of the first major gaming platforms on Terra, and will be partnering with Hashed and Com2us to continue developing both the platform as wells as quality games for users. (Gaming Platform On Terra’s Blockchain Raised $25M From FTX)

Worldcoin is a global wealth project that gives out free crypto in exchange for scanning someone’s retina to get a global database of retinas that could be used for proving identification. The company is raising $100 million in a token sale with a16z and Khosla Ventures. The funds will be used to scale production capacity for the retina scanning orbs, which the Worldcoin team is expecting to reach 50,000 orbs per year in order to scan more people. (Worldcoin to Raise $100M at $3B Token Valuation)

Mina is a layer 1 blockchain that uses zero-knowledge (zk-SNARK) proofs to verify transactions without broadcasting private identification data to the network. The project sourced $92 million in a private token sale led by FTX Ventures and Three Arrows Capital, with Amber Group, Blockchain.com, Circle Ventures, and Pantera participating in the round, among many others. The funds will be used in a grants program that will help attract and fund application developers in the Mina ecosystem in order to grow usability and popularity of the platform. (Mina ecosystem raises $92M to build the lightweight blockchain for Web3)

New Venture Capital Funds, Ecosystem Funds, and Alliances

dao5 is a new venture capital firm started by Tekin Slimi, a former general partner with Polychain Capital. The firm is starting off with a $125 million fund that will be targeting pre-seed and seed-stage deals below $2 million. Once dao5 becomes more established and at least 70% of the initial fund is deployed, it will be converted into a DAO governance structure where the founding investors are given DAO tokens to represent their carry in the firm, economically exposing founders to each other in order to foster cooperation and collaboration. There will be an advisory board performing origination and diligence efforts, with the final investment requiring a successful vote from the founders. (Ex-Polychain Partner Tekin Salimi Launches $125M Crypto Venture Fund)

Nexo (NEXO) is a crypto lender with over 3.5 million users and uses digital assets to back loans and (rarely) mortgages. The company is now expanding into venture capital with Nexo Ventures. The VC line of business is started with $150 million to fund acquisitions as well as investments into Web3, NFT, metaverse/gaming, DeFi, and infrastructure projects. Though the fund will not be very limited in scope, it will focus mostly on Web 3 investments. A unique aspect to the fund is that Nexo is exploring options that could enable its customers to contribute to the fund. (Crypto Lender Nexo Spins Out $150M Venture Arm for Web 3 Investments, Acquisitions)

Haun Ventures is a new venture capital firm founded by Katie Haun, a former general partner at a16z and current board member for Coinbase and OpenSea. Haun raised $1.5 billion that will be split into two funds. $1 billion will go to an acceleration fund, and $500 million to an early-stage fund, and both of them will be focused on providing capital to every layer of the Web3 tech stack. (Crypto investor Katie Haun raises $1.5 billion for Web3 venture fund)

Qualcomm, the semiconductor, software, and wireless technology manufacturer, is entering the crypto space with a $100 million venture capital fund. The new fund, Snapdragon Metaverse Fund, will support startups that are working on augmented-, mixed-, and virtual reality technologies and software for building out the metaverse. Qualcomm already produces semiconductor chips and processors for VR headsets in a partnership with Microsoft, but the company is stepping further into the move towards the metaverse after other companies like Meta (formerly Facebook) and Disney have become more serious about their metaverse initiatives. (Chip supplier Qualcomm creates $100 million metaverse investment fund)

Acala (ACA 3.36% ) is a DeFi network that was the first protocol to become a live parachain in the Polkadot (DOT) ecosystem. The project raised $250 million to start the aUSD Ecosystem Fund that will use grants to support startups that build new use cases for the aUSD stablecoin. The funds were raised from over 30 VC firms, including Pantera, Jumpy Crypto, DCG, and Hypersphere. Stablecoins have helped boost usability of DeFi services like lending, liquidity mining, etc. through benefits that greater price stability offers, such as a low-volatility collateral for borrowing/lending. Acala is working to boost adoption of a Polkadot-native stablecoin in order to reduce the need for bridging from other blockchain ecosystems like Ethereum, which deviates from Polkadot’s goal of having a fully-interoperable ecosystem of blockchains that don’t require bridges to interact with each other. (Acala, VCs Commit $250M for Polkadot DeFi Investments)

Deal of the Week

Optimism is one of the largest and most popular Ethereum layer 2 scaling protocols that uses Optimistic rollups to cut down on time and cost of transactions. The project raised $150 million in a Series B funding round led by a16z and Paradigm, valuing the company at $1.65 billion. Other participants in the round include Stripe Capital, Nascent Capital, and a few notable individual investors, among others.

Why is this a Big Deal

A major hinderance to adoption of application verticals in the digital assets economy (Web3, DeFi, NFTs, etc.) has been the high cost of using them, especially on Ethereum. For example, one of the biggest impacts to the NFT market is Ethereum gas fees, where it could cost hundreds of dollars in fees for someone to mint, purchase, or interact with NFTs. So every time there is sustained, elevated activity on the Ethereum network, NFT volume collapses, and volatility increases drastically. This issue is less impactful in other areas of crypto like DeFi, where simple transaction processing is less intense than image or video processing, but high fees are still a major pain point in these areas that presents a significant barrier to new entrants. This is where layer 2 protocols like Optimism come into play. Optimism so far has saved users over $1 billion in gas fees with its optimistic rollup technology. Optimism uses a unique form of achieving consensus called optimistic proofs. For optimistic proofs, validators start out assuming every transaction is legitimate, and then look for proof of fraud, whereas most other consensus mechanisms assume the opposite and look for proof that each transaction is legitimate. After achieving consensus on transactions, the rollup system is a zero-knowledge rollup (zk rollup) that groups multiple blocks of transactions, takes a snapshot of the final state of transactions and wallet balances, and then broadcasts that snapshot to the Ethereum blockchain as though there was only on set of transactions that took place.

Because of the unique nature of Optimism’s system, total value locked (TVL) in protocols on the layer 2 have outpaced the rest of the layer 2 market, growing over 31% in the past 30 days compared to the 16% growth of all layer 2 TVL combined. This rapid adoption has come after a year of improvements by the Optimism development team that cut average transaction costs by over 30%, with a current target of averaging below $1 per transaction. The funding is the first step in meeting that target, because it will be used for hiring at least 18 new members, mostly around product design and engineering. The protocol is also designed to be very similar to Ethereum from the developer point of view, which makes it easy for the largest collection of crypto developers to transition to working on Optimism if they choose to increase speed and efficiency of their applications at the risk of higher centralization. (Ethereum’s Optimism Raised $150 Million, Hitting $1.6 Billion Valuation)