AWeb3VC - Funding Round Up #21

🗓️ Week of: May 21-27, 2023

Also be sure to follow me on Twitter @aweb3vc 🚀

💡 Web3 Funding Snapshot

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

$253M+ was raised across 33 funding rounds in Web3. For another consecutive week, capital continues to flow, showing improvement from the lackluster start to May. However, as usual, most of the deals continue to be concentrated in the earlier stages. Worldcoin tops the charts this week with its $115M Series C, demonstrating that there is still capital to be deployed. Yet, given this project's high profile, I'm skeptical this signifies a larger funding turning point in Web3.

In the broader crypto markets, Bitcoin and Ether have witnessed their tightest price action in two weeks, remaining rangebound. Nevertheless, with signals of a resolution to the U.S. debt ceiling deal on the horizon, markets appear to be showing signs of optimism. Hopefully, this can carry over into the Web3 venture ecosystem.

🏆 Largest Funding Round

➡️ Worldcoin announced $115M in a Series C funding round. This round was led by Blockchain Capital, with participation from notable investors such as a16z Crypto, Bain Capital Crypto, and Distributed Global. The project was co-founded by Alex Blania and Sam Altman, who is also the CEO of OpenAI.

Worldcoin is an open-source protocol and a decentralized cryptocurrency project with a novel approach to identity verification and wealth distribution. Its key features include:

• World ID: A digital identity that allows users to prove their uniqueness and realness, while remaining anonymous. Verification is accomplished by using a biometric imaging device, the Orb, which scans users’ irises to ensure their uniqueness as humans rather than bots.

• Worldcoin Token (WLD): This is a utility token that gives users a say over the direction of the Worldcoin protocol and will also serve as a medium of exchange within the World App. The WLD is unique in that the token is distributed to people who have verified their uniqueness via a WorldID.

• World App: The first wallet within the Worldcoin ecosystem, which also enables payment, purchases, and transfers globally using digital assets and traditional currencies.

By tying identity to a token, the project aims to provide a globally distributed, equal share of digital wealth, ultimately aspiring to enable universal access to financial benefits in an increasingly digital and AI-driven world. So far, close to 2M people have been onboarded with Worldcoin since the launch of its initial beta tests in 2022.

Why this matters?👉This project has undergone quite an evolution. Initially conceived as an attempt to create a global universal basic income (UBI), it has since developed into one of the most promising endeavors for verifying human identity online, particularly in light of the ongoing rise of AI. If the protocol can truly differentiate between humans and bots, it has the potential to greatly improve tomorrow's internet user experience, reinstate trust online, and possibly spark a wave of new use cases and applications built around World ID. Additionally, Sam Altman's involvement cannot go unnoticed. As the leader of one of the world's most promising AI companies, OpenAI, they could potentially also become one of Worldcoin's largest enterprise users. Given all these factors, it was not surprising that the project was able to secure a 9-figure funding round, a notable achievement amidst the overall slowdown in Web3 venture.

😎 Noteworthy Company

➡️ Redstone is an emerging decentralized cross-chain data oracle. It introduces a novel modular oracle architecture, improved data consumption models, and supports both new and established DApps across more than 40 Layer 1 and 2 blockchain networks, as well as on-chain and off-chain data.

By offering a modular architecture, Redstone's oracles facilitate customizable data scalability through a data access layer that inherits the security of the destination chain, akin to what L2s offer to L1 blockchains. Additionally, by storing signed data packages in the data access layer and delivering them according to conditions set by DApps, gas costs can be reduced by up to 90%. This, combined with sub-second latency, is critical for high-performance applications such as those within DeFi. Importantly, RedStone does not expend gas to push identical data to multiple chains.

Redstone also provides protocols and applications with customizable data consumption models, depending on the business use case. These include a Core model (On-Demand), a Classic model (Push), and the X model (No Front-running). Respectively, these models enable dynamic data injection, decentralized data pushing, and a method to mitigate front-running risk.

The project has raised over $7.5M in funding. Its venture backers include Lemniscap, Blockchain Capital, Airweave, Maven11, Coinbase Ventures, Lattice, Collider Ventures, Distributed Global, and 1kx along with other investors. The project recently secured additional capital in an exclusive funding round that included Web3 pioneers such as Stani Kulechov (Founder of Aave & Lens Protocol), Sandeep Nailwal (Co-Founder of Polygon), Alex Gluchowski (Co-Founder of zkSync), and Emin Gün Sirer (Co-Founder of Avalanche), among many others.

Why this matters?👉Data oracles play a crucial role in maintaining decentralization and are vital for enabling DeFi. However, the oracle landscape has largely remained unchanged and is predominantly dominated by Chainlink. While Chainlink has established itself as a reputable oracle provider, more competition is always beneficial. The modular nature of Redstone could encourage its adoption among developers and expedite the availability of consumable on-chain data sources. Redstone already boasts more than 6B+ on-chain data points, compared to Chainlink's 8.3B+. Therefore, Redstone could potentially emerge as a formidable oracle alternative in the years to come.

👀 Observations, Trends & Themes

➡️ VC’s Shift from Web3

I think it's fair to say that venture funding has been flowing like water from a firehose, moving from Web3 to AI. This trend has practically become a meme at this point, with startup founders and VCs chasing the next big thing in generative AI, reminiscent of the 2021 era for Web3. However, as we delve deeper into 2023, this trend could gain more traction.

Earlier this month, Paradigm, one of the largest venture firms in crypto, subtly broadened its investment focus to include "frontier technologies" such as AI. This was signaled by a rebrand on their website, which no longer mentions crypto or Web3. The change appears to be more about expanding their reach, with sources noting that there's been no practical shift from their ongoing focus on crypto and Web3 projects. However, with a wider investment focus, it remains to be seen how capital will be deployed between sectors. Also, it's unclear whether limited partners (LPs) could have been a catalyst for the expanded investment thesis.

With Paradigm being one of the largest investors in Web3, we'll have to wait and see if other large funds begin following suit and if this shift starts becoming more pervasive.

➡️ Apple Warming Up to Web3

In response to a landmark court ruling that found Apple's 30% in-app purchase tax to be in violation of California's Unfair Competition Law, Web3 companies are exploring innovative ways to adapt their applications for the Apple App Store. Just last week, Stepn announced the launch of an in-app NFT marketplace within its iOS app, enabling purchases through Apple Pay. To navigate the 30% in-app purchase fee imposed by both Apple and Google, Stepn introduced its own in-app currency.

This shift could potentially herald the introduction of alternative payment methods and in-app cryptocurrency transactions in the future, fundamentally changing how Web3 applications operate on the Apple App Store. However, given the elevated costs associated with in-app purchases, it could prove a hurdle for users accustomed to cheaper alternatives outside the iOS ecosystem. For instance, Magic Eden and Axie Infinity have refrained from enabling in-app NFT trading. Nonetheless, it’s encouraging to see the Apple ecosystem now opening up to Web3. Given Apple and the iPhone’s global reach, this could be significant for the future of Web3’s adoption, especially in enabling mobile-native experiences.

➡️ Ripple Making “Waves”

Despite its ongoing, years-long case with the U.S. Securities and Exchange Commission (SEC), Ripple has embarked on a buying spree, either pursuing strategic M&A or making investments. This strategy was highlighted when Ripple recently acquired a stake in Bitstamp, one of the leading cryptocurrency exchanges in Europe, at an undisclosed amount from venture capital firm Pantera, one of the exchange's earliest investors. Earlier this month, Ripple acquired Metaco, a Switzerland-based crypto custody platform, for $250M. Additionally, Ripple invested in emerging market maker Keyrock's $72M Series B in November of last year.

According to Ripple, these investments were made to further grow the company's international presence and to diversify beyond payments. However, they could also be interpreted as a "hedge" against the U.S. market or even against their existing product offerings (enabled by the XRP token), should a decision be made against them in their case with the SEC. Regardless of the motives, it's encouraging to see a new strategic buyer emerging on the scene.

💸 Funding Rounds

Top 15 Rounds

Note: Growminer - Strategic ($48M) not included above as details surrounding the round and the company are limited (and could potentially be a scam)

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

All Rounds

Narwhal Finance - Private Sale (Not Disclosed) | Decentralized dual-chain perpetual trading platform operating on both Arbitrum and BNB Chain networks: https://narwhal.finance/

Arena Of Faith - Seed ($1.8 M) | Multiplayer online battle arena (MOBA) game allowing players to challenge and invest in esports clubs and competitions: https://aof.games/

Openfront - Seed ($3M) | Wallet-as-a-service infrastructure for game developers and publishers: https://www.openfort.xyz/

Sort - Seed ($3.5M) | Developer platform for Web3 UI components: https://sort.xyz/

LondonLink - Seed ($630K) | Bitcoin and cryptocurrency brokerage based in Europe: https://londonlink.io/

BoomLand - Seed ($1M) | Blockchain game developer and publisher of “Hunters On-Chain”, a mobile first, multiplayer role playing game (RPG): https://linktr.ee/BoomLandGames

Houdini Swap - Seed ($250K) | Privacy preserving application to securely send, swap, or bridge tokens without revealing on-chain links between origination and destination wallets: https://houdiniswap.com/

Finblox - Strategic (Not Disclosed) | Gamified digital asset platform and the ecosystem where users can game, trade and passively earn crypto rewards: https://finblox.com/

Kairos Loan - Seed ($1M) | Lending protocol using NFTs as collateral: https://www.kairos.loan/

Syntropy - Seed ($4M) | Fully-decentralized routing protocol for the Internet: https://www.syntropynet.com/

LabDAO - Private Sale ($3.6M) | Online research collective focused on computational life sciences: https://labdao.xyz/

Fastlane - Seed ($2.3M) | Maximal extractable value (MEV) protocol for validators on Polygon and other Ethereum Virtual Machine (EVM) based blockchains: https://www.fastlane.finance/

Num Finance - Seed ($1.5M) | Decentralized finance protocol for issuing stablecoins in emerging markets leveraging tokenized local currencies, money markets, and fiat on and off-ramps: https://num.finance/

RedStone - Seed+ ($350K) | Decentralized modular cross-chain data oracle: https://redstone.finance/

Kigo - Seed ($6.5M) | Empowers companies to engage people through new forms of rewards, membership and recognition enabled by blockchain: https://kigo.io/

Tanssi Network (Moondance Labs) - Seed ($3M) | Infrastructure protocol for deploying appchains via parachains on the Polkadot network: https://www.tanssi.network/

BTC Domain - Seed ($3M) | Bitcoin native domain system empowered by Ordinals and ZK-STARK: https://btcdomains.io/

Metagame Industries - Seed (Not Disclosed) | Game studio that is leveraging blockchain and AI build next-generation meta-games: https://www.metagame.industries/

Kana Labs - Strategic (Not Disclosed) | Web3 middleware solution that enables multi-chain DApps while gaining native liquidity aggregation and cross-chain capabilities: https://www.kanalabs.io/

OrionX - Strategic (Not Disclosed) | Cryptocurrency exchange focused on Latin America: https://orionx.com/

Worldcoin - Series C ($115M) | Protocol and global digital currency intended to be the world’s largest identity and financial public network: https://worldcoin.org/

TomoChain - Strategic (Not Disclosed) | General purpose smart contract platform and blockchain network that leverages Proof-of-stake Voting (PosV) consensus algorithm: https://tomochain.com/

GoodGang Labs - Seed ($2M) | Avatar based communication platform for metaverse and gaming platforms: https://goodganglabs.com/

OutDID - Strategic ($50K) | End-to-end government issued ID verification platform enabled by zero-knowledge technology and decentralized data storage: https://www.outdid.io/

PoP Planet - Seed ($4M) | Integrated creator community tool and content application enabled by Web3 and AI technologies: https://popp.club/

Pomerium - Private Sale ($20M) | Web3 gaming studio and platform for play-to-earn games: https://pomerium.space/

Growminer - Strategic ($48M) | Cryptocurrency exchange and staking service: https://growminer.com/

UrbanChain - Series A ($6.5M) | Peer-to-peer energy exchange services in the UK enabled by blockchain: https://www.urbanchain.co.uk/

AiDoge - Public Sale ($14.7M) | AI-driven meme generator: https://aidoge.com/

Bitstamp - Strategic (Not Disclosed) | European based cryptocurrency exchange: https://www.bitstamp.net/

BurgerCities - Strategic ($4M) | One-stop play-to-earn MetaFi platform: https://burgercities.org/

Loot Labs - Seed ($1.5M) | Developer of Boxed.gg, a platform to buy, sell and trade digital collectibles via loot boxes: https://www.lootlabs.xyz/

Orbofi AI - Private Sale ($2.8M) | Generative AI engine for web3, games, apps, media, and online communities: https://www.orbofi.com/

New Funds

Dispersion Capital - Venture Fund 1 ($40M)

Cool Resources

Hungry for more coverage on the latest early-stage companies and projects within Web3? Check out Web3 Adventures, a weekly newsletter featuring a deep dive into one innovative Web3 business. It's available on both Beehiiv and LinkedIn. This newsletter is written by Mitko, a good friend and confidant of AWeb3VC.

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.in