AWeb3VC - Funding Round Up #17

🗓️ Week of: April 23-29, 2023

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💡Web3 Funding Snapshot

(See "Funding Rounds" section for the complete list of deals)

Last week, over $183M was raised across 30 funding rounds in Web3. While I remained optimistic for most of April, it's becoming apparent that Web3 venture funding continues to trend sideways and could potentially be on the decline. Granted, there are still a number of Seed rounds announced every week. However, the volumes of Series A and beyond continue to be few and far between, as investors are either waiting to see further traction from these projects or shifting their focus elsewhere, and even outside of Web3 altogether (e.g., generative AI). This has been reflected in deal terms, where more extension rounds at flat valuations are becoming increasingly common. As we wrap up an uneventful April, let's hope May brings better news for the Web3 venture ecosystem.

🏆 Largest Funding Round

➡️ Zodia Custody, a crypto custodial Venture of Standard Chartered, announced the closing of a $36 million Series A. The round was led by the digital assets arm of Japanese financial services firm, SBI Holdings, along with SC Ventures, Standard Chartered's corporate venture arm. Through the deal, Standard Chartered diluted its position in the subsidiary, but still remains the majority shareholder. The funding also follows Zodia's announced joint venture launch in Japan with SBI Holdings in February.

The company was originally founded in 2020 as a partnership between multinational banking and financial services companies, Standard Chartered and Northern Trust, to provide digital asset custody to institutional investors. Its custody offering provides institutional-grade secure safekeeping for Bitcoin, Ether, Bitcoin Cash, Litecoin, Chainlink, Uniswap, Wrapped Bitcoin, and USDC. The company is also registered with the Financial Conduct Authority (FCA) in the United Kingdom, requiring the platform to comply with key risk management, governance, and regulatory requirements. The firm's clients currently include a range of exchange-traded digital assets funds in Europe.

Why this matters?👉 The custody environment continues to evolve, especially as more services are tailored to institutional investors. In light of the revised qualified custodian requirements by the SEC and other global regulators, the list of custodians that are capable of servicing institutional clientele is narrowing. Standard Chartered, through Zodia Custody, joins the Bank of New York Mellon as another Globally Systemically Important Financial Institution (G-SIFI) venturing into crypto custody. However, time will tell if these bank-backed custody services offer better and more secure solutions compared to their crypto-native counterparts.

😎 Noteworthy Company 

➡️ Credora is a lending infrastructure provider specializing in offering systematic credit ratings for private credit markets, focusing on both CeFi (Centralized Finance) and DeFi (Decentralized Finance) ecosystems. Lenders can either conduct their own underwriting using Credora's platform or rely on its Credit Evaluation Methodology. In both cases, the platform leverages privacy-preserving technology based on on-chain and off-chain data to enable real-time evaluation of credit risk while maintaining the confidentiality of sensitive borrower information. This approach addresses the issue of information asymmetry in credit markets, offering greater transparency and lending built on solid underwriting data and standards.

Since its inception in 2019, Credora has facilitated over $1 billion in loans across various borrower types and currently monitors more than $4 billion of borrower assets. Its coverage extends across the majority of CeFi and DeFi venues. Recently, Credora secured $6 million in a strategic funding round led by S&P Global and Coinbase Ventures, which also included The Spartan Group, Amber Group, CMT Digital, Hashkey, GSR, KuCoin Ventures, as well as prominent DeFi institutional lenders Paradigm.co, Pirata Capital, Breed VC, and Wagmi Ventures.

Why this matters?👉 In line with the institutional theme of the week, Credora offers critical infrastructure to institutionalize digital asset lending. By providing credit evaluation methodology and corresponding credit ratings using on-chain data, credit risk in CeFi and DeFi markets can be better identified and managed accordingly. This will hopefully prevent or at least mitigate the impact of the next wave of credit blow-ups in digital asset markets, like those experienced in 2022.

👀Observations, Trends & Themes

➡️ VC Chains

"VC Chain" has long been used as a term to denote crypto projects where venture capital investors comprise a significant portion of its underlying token allocation. However, this term takes on a whole new meaning in an emerging development with venture capital firms creating their own blockchains. Recently, a16z Crypto revealed a new Layer 2 rollup client called Magi based on Optimism, the same blockchain infrastructure used by Coinbase Base. While a16z's motives around Magi are not fully clear, the project appears to be an attempt to offer better developer infrastructure supporting the Optimism ecosystem, serving as a public good. At the same time, the project also seems to help many of the VC firm's existing portfolio companies and could serve as a potential avenue to better identify up-and-coming developers and prospective deal flow. a16z is not alone in this development. Other VC firms like Paradigm and Jump Crypto have made similar developer contributions either in public good initiatives or to support their underlying portfolios.

Check out this article from The Block which takes a close look at a16z Crypto's broader strategy:

➡️ New Players Emerging

While 2023 is still taking shape, a cohort of emerging investors in Web3 has been catching my attention. Despite the setbacks from last year, these investors appear to be taking advantage of the opportunities the crypto winter presents and may be uniquely positioned as we head into the next market cycle.

📈DWF Labs: I've covered them in my prior Round Ups. The market maker and Web3 investment firm has become one of the most active investors in the space since the start of 2023. While there have been questions raised about their strategy, the amount of capital they've deployed into bespoke private token deals could yield significant returns during the next bull cycle.

📈Hashkey Capital: Following DWF Labs, the firm has been one of the most active investors with over 20+ investments so far in 2023. This is likely attributed to their $500M Fund 3, which was closed in January, providing an ample amount of dry powder to kick off the year. Not to mention, the firm has also been building a reputation as one of the most respected investors within the Web3 ecosystem in Asia, which certainly helps dealflow.

📈The Spartan Group: With 8 investments, the firm was the most active investors in April and has also been active since the start of 2023. Besides venture, the firm offers M&A advisory and runs a Web3 venture studio putting themselves in a unique position from a dealflow prospective.

📈nChain: Although the firm has only made three investments so far in 2023, their deal terms have caught my attention. Across each deal, the firm has taken a 20%+ stake in a private equity-type fashion. This is notable, as the firm has an existing portfolio of product lines and businesses across the crypto and blockchain ecosystems.

📈Bitget: Similar to its exchange peers, the crypto derivatives exchange is becoming more active on the venture front. Besides making direct investments into token projects, the firm has also committed capital to a number of Layer 1 blockchain ecosystem funds, including its support of the Sei Network, which it announced earlier this month.

💸Funding Rounds

Top 15 Rounds

Want access to our complete dataset or propose an update? Contact: [email protected]

All Rounds

Goals - Series A ($20M) | Free-to-play social and competitive soccer game with Web 3 elements: https://playgoals.com/

Vega - Seed ($2M) | NFT collection project of future music idols: https://vega.fan/

Cosmose AI - Strategic (Not Disclosed) | Suite of retail software solutions focused on connecting offline and online experiences for shoppers; The solution also allows users to shop with cryptocurrencies: https://cosmose.co/

Thetanuts Finance - Private Sale ($17M) | Multichain decentralized options protocol that offers a range of crypto structured products: https://thetanuts.finance/

Teahouse Finance - Seed ($5M) | Decentralized asset management that allows investors to choose from different investment strategy vaults: https://teahouse.finance/

Rise - Seed ($3.8M) | Web3-enabled payroll & compliance solution for organizations that compensate personnel via digital assets: https://www.riseworks.io/

DSpace - Seed ($1M) | Web3 location-based game that lets users explore, capture, and train virtual beasts in the real world: https://www.d-space.io/

Colecti - Seed ($519K) | NFT Marketplace on the Lisk blockchain: https://colecti.com/

ARPA - Private Sale (Not Disclosed) | Secure computation network for blockchain-adapted cryptography using a threshold BLS signature network to provides a reliable infrastructure for verifiable Random Number Generators: https://www.arpanetwork.io

Omni Network - Private Sale ($18M) | Programmable interoperability layer for Ethereum that allows developers to build applications across all rollups without fragmenting liquidity: https://omni.network/

TinyTap - Strategic ($8.5M) | Library of games by teachers that also empowers educators to create and share interactive educational content while receiving a revenue share when learners use that content: https://www.start.tinytap.com/animoca-brands

Credora - Strategic ($6M) | Infrastructure for institutional credit markets using privacy-preserving technology that enables real-time credit analytics: https://credora.io/

DFlow - Seed+ ($5.5M) | Decentralized marketplace for order flow that brings open and fair payment-for-order-flow (PFOF) to participants in the digital assets markets: https://dflow.net/

Amboss - Seed ($4M) | Data, insights, and coordination tools for the Bitcoin Lightning Network: https://amboss.space/

MetaCRM - Seed ($2.5M) | Web3-native customer relationship management (CRM) solution: https://metacrm.inc

Libraro - Seed ($2.49M) | Platform to modernize book publishing using blockchain technology: (No Website)

Flappy Moonbird - Series A+ ($2M) | Free-to-play Web3 games produced by Helix Table, a studio of video game developer and publisher Voodoo: https://flappymoonbirds.com/

CV Wallet - Seed ($1.1M) | Web3-based an open skill-based hiring platform that harnesses digital identities and verifiable credentials: https://cvwallet.com/

D3 Labs - Seed (Not Disclosed) | Offers web3 and blockchain-based services, including programmable money: https://www.linkedin.com/company/d3labsio/

Zodia Custody - Series A ($36M) | Institutional grade crypto custody platform originally developed by Standard Chartered and in association with Northern Trust: https://www.zodia.io

Axoni - Series B+ ($20M) | Provider of data synchronization technology to automate synchronization of information and processes across financial market infrastructure: https://axoni.com/

Cata Labs - Seed ($4.2M) | Developer of Catalyst, a cross-chain bridge that aims to make it easier for blockchains to communicate with each other: https://catalabs.org/

Tribe3 - Seed ($2.1M) | Decentralized NFT futures exchange with social and gamification elements: https://tribe3.xyz/

Native - Seed ($2M) | White-label DEX that enables exchanges to be incorporate as a feature into any app: https://native.org/

Aki Network - Seed (Not Disclosed) | Data-powered consumer network focusing on Web3-native influencer marketing: https://akiprotocol.io/

Giddy - Seed+ ($6.9M) | Self-custody, recoverable smart wallet that also connects with DeFi earning opportunities: https://giddy.co/

Transmira - Strategic ($4M) | Developer of OMNISCAPE, a metaverse platform that blends Augmented Reality (AR), Virtual Reality (VR), and digital goods represented on the blockchain: https://transmira.com/

NFTGo - Seed+ ($4.0M) | Data aggregation and analytics platform for NFT market data: https://nftgo.io/

Secro - Seed ($3.6M) | End-to-end workflow for cross-border commodity supply chain operations built using private blockchain network: https://secro.io/

SuiPad - Private Sale ($1.15M) | Launchpad platform that enables projects to raise capital and launch on the Sui network: https://www.suipad.xyz/

New Funds

No new funds announced this week.

Cool Resources

Arkham Intelligence is a blockchain analytics and intelligence platform. Besides being able to track addresses and known entities on-chain, it also provides advance visualizations making it easy visualize transactions. The company launched their public beta in 2022, and is free to use with an invitation.

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.