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- AWeb3VC - Funding Round Up #16
🗓️ Week of: April 16-22, 2023
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💡Web3 Funding Snapshot
(See "Funding Rounds" section for the complete list of deals)
Last week, over $263M was raised across 30 funding rounds in Web3. Although this is an improvement from what was reported in the last Round Up, it's still relatively uneventful. At least we've surpassed $4B+ in funding for the year. While conditions for venture in Web3 seem to be improving, developments in the broader markets could have a direct impact. We observed our first later-stage deal that could be attributed to Bitcoin's 2023 rally (Unchained), and a growing number of private token sales are taking place as "alt season" starts to emerge again. However, all of this could be overshadowed by regulatory concerns, as many companies are looking to build outside of the U.S.
🏆 Largest Funding Round
➡️ Unchained secured $60M in Series B funding led by Valor Equity Partners, with participation from existing investors NYDIG, Trammell Venture Partners, Ecliptic Capital, and Highland Capital Partners. The deal is reported to close in multiple tranches.
The company offers Bitcoin-based financial services to retail and institutional clients, ranging from custody, trading, lending, and asset management services. Their custody business secures over $2B in Bitcoin across thousands of keys globally by providing self-custody and cold storage options to clients. In addition, the company has originated over $500 million in Bitcoin-collateralized loans since 2017, and they were one of the first providers in the US to offer Individual Retirement Accounts (IRAs) that allowed clients to hold Bitcoin.
Why this matters?👉 This round could signal a positive turn for crypto/Web3 venture funding. Despite having to lay off 15% of their employees in November of last year and securing a prior $15M bridge funding round, Unchained's business appears to have rebounded in the past quarter. This is likely largely due to Bitcoin's rally since the start of this year, which has created an uptick in demand for custody and trading services. Moreover, the round demonstrates that venture investors interest/confidence is potentially returning and could pave the way for more deals in the months ahead, especially for later-stage deals. However, Bitcoin did experience an >8% drop within the past week, so it remains to be seen if this trend catches some legs.
😎 Noteworthy Company
...noteworthy for other reasons 🙈
➡️ OPNX (Open Exchange) is a new cryptocurrency exchange offering a public marketplace and central order book for trading bankruptcy claims. The exchange aims to provide liquidity to the $20B+ market of creditors impacted by the collapse of several crypto firms in 2022. OPNX claims to be built on zero-knowledge proof technology, allowing parties to verify balance, liquidation, withdrawal, deposit, and trade data as correct while preserving the integrity and complete privacy of users. The exchange will be powered by the "FLEX" token, the native fee-paying token previously adopted by OPNX's predecessor, CoinFLEX. While OPNX will initially focus on bankruptcy claims, it intends to eventually offer markets in crypto spot, derivatives, and margin trading.
However, controversy lies in the genesis of OPNX. It comes as the brainchild of Su Zhu and Kyle Davies, who were the co-founders of the now-bankrupt hedge fund, Three Arrows Capital (3AC), one of the most notable victims of the 2022 crypto credit crisis. The pair teamed up with CoinFLEX CEO, Mark Lamb, to restructure and rebrand CoinFLEX as OPNX after the crypto derivatives exchange suspended its operations in June 2022 amidst a wave of high-profile liquidations and bankruptcies. To lead the new operations, Leslie Lamb (wife of Mark Lamb) was named CEO of OPNX, having previously served as CMO of CoinFLEX.
The exchange officially launched earlier this month after receiving venture funding. Many were perplexed that Zhu and Davies could receive funding or be trusted, given 3AC's spectacular implosion last year.
Why this matters?👉Last week in a tweet, OPNX finally announced the names of the firms that were backing the new venture. However, many of the reported investors subsequently denied having given any money to OPNX, resulting in an utter trainwreck on Twitter. Based on appearances, it seems that CoinFLEX's prior investors may have unknowingly received tokens and/or equity in OPNX via the restructuring, despite not having a choice of being associated with the company. While this is likely a one-off incident, it does raise questions about the credibility and transparency of actors within the industry and their dealings with investors. Hopefully, as an industry, we can prevent these wacky deals from reaching the headlines.
👀Observations, Trends & Themes
➡️ Crypto's Exodus from the 🇺🇸?
The United States has long been one of the most important locations for cryptocurrency markets and Web3. However, after facing years of regulatory uncertainty and adversarial regulators, many U.S. crypto companies are looking to pursue operations abroad. This is highlighted by recent comments from Coinbase, which is reportedly developing an offshore derivatives exchange, along with Gemini, and Bittrex deciding to abandon the U.S. altogether. On top of this, the European Union finalized its wide-ranging Markets in Crypto Assets (MiCA) legislation, making it one of the first major jurisdictions to clarify its approach to supervising the sector.
Despite these developments, a shift away from the U.S. may be no easy undertaking – at least on the venture capital front. U.S.-based crypto companies have attracted the most amount of capital, with over a quarter of deals announced in 2023 going to U.S. companies. This is largely due to the industry's close proximity to the U.S. venture capital ecosystem. If an exodus is underway, there are no certainties that U.S. venture dollars will also follow these companies. Hopefully this is something not being over looked by U.S. lawmakers and regulators in D.C.
💸Funding Rounds
Top 15 Rounds
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All Rounds
EVEN - Seed ($2.2M) | Platform that rewards fans for supporting their favorite artists by giving first access to the artist's music, content, tour tickets, merchandise, and more: https://www.even.biz/
AiONE - Public Sale ($1M) | Decentralized application that enables enterprise to integrate artificial intelligence (AI) and machine learning (ML) tools into business processes: https://ai.one/
Wallet Guard - Seed (Not Disclosed) | Web3 cybersecurity tools used to protect users’ digital assets and data from theft, scams, and fraud: https://www.walletguard.app/
Galactic Holdings - Seed+ ($10M) | All-in-one ecosystem for cryptocurrency transactions, which includes a crypto wallet (TruBit Wallet), a crypto exchange (TruBit Pro), and Mexican Pesos pegged stablecoin (MMXN): https://galactic.holdings/
Fractal - Seed ($6M) | Enables on-chain financial assets to interact with and be collateralize against each other via a universal margin account: https://www.fractalprotocol.org/
Pillz - Strategic (Not Disclosed) | Devices that make NFTs and other digital collectibles tangible: https://pillz.tech/
VycoLend - Seed ($500K) | Non-custodial lending protocol built for layer 2 blockchain networks that enables users to participate in isolated lending pools: https://www.vycolend.com/
Unchained Capital - Series B ($60M) | Bitcoin native financial services company offering custody, trading, inheritance, lending and individual retirement accounts: https://unchained.com/index.html
HashPort - Series C+ ($2M) | Blockchain solutions provider focused on smart contract auditing, wallet management, and NFT issuance, management, and marketplace: https://hashport.io/
Swaap - Seed ($4.5M) | Market neutral Automated Market Maker (AMM) protocol that leverages oracles and dynamic spread to provide sustainable yields for liquidity providers: https://www.swaap.finance/
Coinflow - Seed ($1.45M) | Web3 payment infrastructure solutions provider: https://coinflow.cash/
Yoz Labs - Seed ($3.5M) | Web3 notification platform designed to make it easier for developers and projects to bring notifications to users: https://www.yoz.cloud/
Karate Combat - Private Sale ($18M) | Premier full contact striking sports league and immersive gaming application: https://www.karate.com/
Fluree - Series A ($10M) | Open-source semantic graph database that leverages a permissioned blockchain and data-centric security policy controls to store and manage data in a decentralized format: https://flur.ee/
Universal Ledger - Seed ($10M) | Wallet-as-a-service platform, allowing developers to build digital wallet experiences with native identity integration: https://www.uled.io/
Checkkit - Seed (Not Disclosed) | Blockchain powered anti-counterfeiting solution for food and drug supply chain tracking: https://chekkitapp.com/
Accredify - Series A ($7M) | Verifiable credentials issuance platform that leverages blockchain technology: https://accredify.io/
Shield - Seed ($2.1M) | Suite of security solutions designed to help organizations prevent crypto exploits and increase user trust across the ecosystem: https://www.getshield.xyz/
Berachain - Private Sale ($42M) | EVM-compatible Layer 1 blockchain, built using the Cosmos SDK, and secured by the Proof-of-Liquidity Consensus Protocol: https://berachain.com/
P2P - Series A ($23M) | Provides access to secure, non-custodial staking, and network validation: https://p2p.org/
Tableland - Series A ($8M) | Decentralized database built on the SQLite engine, providing developers with a Web3-native, relational database: https://tableland.xyz/
Nayms - Private Sale ($12M) | On-chain insurance marketplace for transparent, traceable, and tradable digital assets risk: https://nayms.com/
MetaGravity - Seed ($9.5M) | Distributed compute infrastructure for metaverse gaming and virtual world simulations: https://www.metagravity.com/
OPNX (Open Exchange) - Seed (Not Disclosed) | Cryptocurrency exchange for bankruptcy claims, spot, and futures: https://trade.opnx.com/
Flow - Seed ($3M) | NFT marketplace and aggregator that combines machine learning for order matching, execution, and analytics: https://flow.so/
iZUMi Finance - Private Sale ($22M) | Multi-chain DeFi protocol providing one-stop liquidity as a service: https://izumi.finance/home
HypeSaints - Seed (Not Disclosed) | Web3 on-chain gameboy ecological product centered around Non-Fungible Stories (NFS): https://hypesaints.xyz/
Playbux - Seed ($2M) | NFT-based metaverse integrates Shop to Earn, virtual communities and blockchain services: https://www.playbux.co/
SuperDuperSecret - Seed ($1M) | Web3 battle-royale style multiplayer chess game: https://www.royalechess.com/
Sphere 3D - Private Placement ($3M) | Net carbon-neutral cryptocurrency miner: https://sphere3d.com/
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About
AWeb3VC is a source for venture funding news, emerging startups and trends across Web3. I've been closely following cryptocurrencies and digital assets since 2013 and started working in space since 2018. Now I'm on a mission to build the most extensive venture ecosystem for BUIDLERS in Web3, starting first by tracking those BUIDLERS.