Venture Funding Plummets

This week was a slow one in venture capital funding. Funding fell to the lowest levels we’ve seen all year at $111M, with only 13 deals completed. This is a 64% decrease from $306M in funding last week, and a 60% decrease in deals from 32 last week. CeFi and NFTs saw slight increases in funding from last week while each other sector declined. The largest drops were in the Infrastructure and Metaverse/Gaming segments, which were the highest funded last week. While recent funding has been slow, it’s important to note that the first half of the year for 2022’s crypto funding has already exceeded total funding for 2021. According to Dovemetrics, crypto funding for the first half of 2022 was $1.79 billion, exceeding 2021’s full year crypto funding of $1.65 billion. Also worth mentioning is that projects may be waiting until the end of the summer to announce or close recent deals.

Despite the lack of venture deals this week, crypto funds raised $525M. The crypto funds included Coinfund, Shima Capital, and Superlayer. The largest of the funds raised was Coinfund’s Venture Fund I, which raised $300M to invest in early-stage crypto projects. Coinfund plans to invest $6-$10M across 30-40 companies. Also notable was venture capital firm Dragonfly acquiring Metastable Capital. Metastable Capital has been around since 2014 and was founded by Naval Ravikant. The firm had over $400M in AUM as of July 31^st and its crypto investments include Ethereum.

While most deals this year have been Seed Round deals, this week saw a significant uptick in Series A deals. There were 4 Series A deals, which made up nearly 31% of all the deals this week. 

Deal of The Week

Fractional, a collective ownership NFT platform, has completed a Series-A funding round of $20 million led by Paradigm. Other investors include Uniswap, DC Investor, and many other angel investors. Along with the fund-raise, Fractional announced a rebranding to “Tessera” to give users a better sense of brand consistency. Tessera (formerly Fractional) serves as a collective NFT ownership platform, allowing investors who can’t personally afford blue-chip NFTs a chance to own a portion of the most iconic NFTs. 

Why Is This Deal of The Week?

The fractionalization of assets is increasingly becoming embraced — especially with the help of blockchains — whether it be investors buying a fraction of a Bitcoin or their favorite NFT. Tessera is capitalizing on the novel trend and increasing accessibility for the average NFT investor. Most people cannot afford blue-chip NFTs such as Punks or BAYCs that go for thousands of dollars each. Since launching in 2021, Tessera has facilitated over $2 billion in trading volume and was also used to raise over $8 million to help Ukraine. Collective ownership is beneficial for investors but mutually beneficial for collection creators. Fractionalization allows the community to grow organically without diluting the collection with additional pieces. In today’s modern age, nothing is more powerful than a unified community, and Tessera clearly understands the value proposition. Tessera plans to continue capitalizing on community growth, with an updated version of its platform rolling out in October. From there, Tessera will gradually add additional NFT collections to its platform.

Selected Deals

Decentralized Web 3 identity platform .bit raised $13M in a Series A fundraising round from CMB International, HashKey Capital, Qingsong Fund, GSR Ventures, GGV Capital, and SNZ. .bit is committed to providing permissionless and decentralized identity for individuals and DAOs. There are currently more than 38k independent addresses that have registered a total of more than 110k .bit accounts.

Murasaki B.V., a company that is working to build a GameFi economy, raised $1.5M led by Incubate Fund, with participation from Skyland Ventures and Mint Ventures. Murasaki’s inaugural title, Cyberstella, will use the play-to-earn model and is set to be released in early 2023.

Satellite IM, a blockchain-based messaging platform, has raised $10.5M in a seed round, led by Multicoin Capital and Framework Ventures with participation from Hashed Venture Fund, Solana Ventures, and Pioneer Square Ventures Fund, among others. Satellite IM is built as an EVM-compatible protocol for simple sovereign storage and peer-to-peer communication.

Primitive is a decentralized finance (DeFi) infrastructure platform aiming to develop innovative solutions for trading derivatives. The company has secured $9M in funding through its Series A round led by Bain Capital Crypto. The funding round also included additional investor participation from Robot Ventures, 1Confirmation, and Nascent. Primitive plans to use the capital raised to develop a product that allows for easier identification of popular automated market maker (AMM) liquidity pools. 

Unlockd is an NFT-based protocol aiming to provide its users with the ability to borrow funds by using their NFTs as collateral. The company has secured $4.4M in funding through its seed round led by Blockchain Capital. The funding round also included additional investor participation from Play Ventures, Sfermion, and Spartan Group. Unlockd plans to use the capital raised for platform expansion, product development, and auditing services.