AWeb3VC - Funding Round Up #31

🗓️ Week of: July 30 - Aug 5, 2023

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

$69M+ was raised across 21 funding rounds in Web3. This week marked one of the quietest in terms of funding in 2023. While the robust number of funding rounds so far in Q3 makes the lull puzzling, it's possible that some companies, particularly DeFi projects, are choosing to stay under the radar following the recently reported Curve exploit. However, the dip in funding this week doesn't overly concern me. Indicators from the broader venture ecosystem point to its vitality – an increase in post-Series A rounds, venture firms raising new funds, a lack of new major setbacks on the regulatory front, potential developments in ETH futures ETFs, and a relatively stable overall crypto markets. We anticipated an uneventful 2023, and this week seems to reiterate that sentiment.

🏆 Largest Funding Round

➡️ Socket announced $20M in Series A funding led by Andreessen Horowitz (a16z). Other investors in the round included Abstract Ventures, Wndrco, Unusual Ventures and a list of high-profile of angel investors including Aaron Levie (Co-founder and CEO of Box) and Dylan Field (Co-founder of Figma) among others.

Socket specializes in providing scanning tools that detect security vulnerabilities in open-source code. Rather than merely checking software against public databases for reported vulnerabilities, it conducts a deep analysis, offering actionable feedback that enables users to quickly evaluate the security and health of any open-source package.

Specifically, Socket identifies high-level red flags in software, including malware, typo-squatting, misleading packages, unmaintained code, and excessive permissions. The platform features a search function, allowing users to delve into a codebase to identify and monitor changes in code dependencies. Additionally, it offers a free browser extension designed to assess the security and trustworthiness of an open-source package.

Why this matters?👉Sharing code freely has made building software drastically cheaper and faster. However, the security and reliability of open-source code often become an afterthought. Given the widespread use of open-source code in Web3 and the severe consequences of identified exploits, tools like Socket have become increasingly vital for Web3 SecOps. This need has been underscored by recent incidents, such as the Curve/Vyper exploit. While Socket seems to be a general-purpose cybersecurity tool, it's intriguing to see that some of their top clients are leading names in the Web3 space, including Metamask, Phantom, Brave, and Magic Eden. Given the rising demand for Socket’s solution within Web3 and the broader adoption trend of open-source code, this product's SAM (Serviceable Available Market) and TAM (Total Available Market) are poised for ongoing expansion.

😎 Noteworthy Company

➡️ Solv Protocol is an on-chain fund platform that utilizes smart contracts to automate fund issuance, trading, and settlement in a non-custodial manner. The protocol is enabled by the ERC-3525: Semi-Fungible Token (SFT) standard, often referred to as “financial NFTs”, which enables future cash flows of an on-chain instrument to be tokenized.

Solv enables users to construct various on-chain fund products, such as fixed-income, money market, or tokenized REITs, and manage them efficiently. Participants can invest across multiple strategies, access real-time performance metrics on a visual dashboard, and seamlessly exit through trading or borrowing against the SFTs. Asset managers can tailor SFTs with custom rules, fees, and strategies through smart contracts, while investors can buy a share of these SFTs. These tokens are fully tradeable on secondary marketplace, and fund settlements, including principal and interest distributions, are automated via smart contracts. Additionally, Solv offers integrated centralized and decentralized custody solutions and connects with top crypto analytics and exchanges for meticulous monitoring of net asset values and transactions.

Recently Solv received $6M in funding from Laser Digital, a subsidiary of Nomura, as well as OB Venture Management, Mirana Ventures, Emirates Consortium, Matrix Partners, Apollo Capital, HashCIB, Geek Cartel, Bing Ventures and Bytetrade Labs.

Why this matters?👉Liquid token trading is one of the most popular strategies for crypto hedge funds with tens of billions under management. Solv essentially enables any hedge fund manager to launch and execute this strategy on-chain. This can be especially beneficial for emerging fund managers who are seeking capital and might not have the resources to establish a traditional fund from scratch. Given that Solv has already attracted over $100M in capital to the protocol, it undoubtedly presents a viable option. However, securities laws seem likely to apply to SFTs, leading to potential regulatory implications. Nonetheless, it remains to be seen what role Solv will play in the evolution of financial instruments and investment vehicles on-chain, which could attract billions in capital.

👀 Observations, Trends & Themes

➡️ Bitcoin ESG Report

In a recent report that delighted the industry, KPMG offers a positive perspective on Bitcoin's environmental role within the ESG (Environmental, Social, and Governance) framework. The Big Four accounting firm emphasizes that Bitcoin's operations, while energy-intensive, often rely on renewable sources like hydro, wind, or solar due to miners' quest for cost-effective electricity. Contrary to critics focusing on the sheer energy consumption of Bitcoin, KPMG points out that Bitcoin utilizes only around 0.55% of the world's electricity—comparable to standard laundry dryers. The report further highlights Bitcoin miners' potential in stabilizing renewable energy grids, citing their adaptability during peak supply times. Furthermore, KPMG suggests Bitcoin mining might not only offer innovative solutions like heating spas but could also play a crucial role in reducing potent greenhouse gases like methane through strategies like gas flaring.

➡️ More Web3 VC Updates

Reported last week, there appears to be a “tale of two cities” contrasting venture investors in Web3. Established crypto-specialized VC investors seem to be navigating crypto winter adeptly, while traditional funds that crossed over to crypto are facing challenges. This disparity is likely influenced by several factors, such as the rising interest rate environment and institutional LPs adjusting their portfolios and capital allocations. Nevertheless here a few highlights to underscore this observed trend:

💸 Funding Rounds

Top 15 Rounds

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

All Rounds

Common Computer - Series B+ ($6.3M) | Developer of AI Network, a blockchain protocol-based collaborative computing architecture for AI and Ainize, a marketplace for opensource AI models: https://comcom.ai/en/

Oumla - Seed (Not Disclosed) | Developer secure and scalable blockchain tooling infrastructure (API/SDKs) enabling developers to easily build on top of blockchains: https://www.oumla.com/ 

ANote Music - Seed+ ($3.6M) | Primary and secondary marketplace for investing in for music royalties: https://www.anotemusic.com/ 

Conic Finance - Seed ($1M) | Platform built for liquidity providers to easily diversify their exposure to multiple Curve pools: https://conic.finance/ 

Solv Protocol - Strategic ($6M) | Decentralized platform that enables professional fund manager to create, launch and manage investment funds on-chain: https://solv.finance/ 

Ringo - Seed ($400K) | Business to business music licensing and procurement platform: https://ringosongreport.com/ 

DogeWalk - Seed ($1M) | Web3 social app designed for dog lovers: https://dogewalk.io/ 

Socket - Series A ($20M) | Security vulnerability scanner used to detect and block security threats originating in open source code: https://socket.dev/ 

MasterExchange - Seed ($2.7M) | Platform for buying, selling and trading shares in music rights and royalties: https://www.masterexchange.com/ 

Terminal 3 - Seed (Not Disclosed) | Web3 user data infrastructure that leverages decentralized storage and zero-knowledge (ZK) proofs: https://www.terminal3.io/ 

Conductive.ai - Seed (Not Disclosed) | Web3 engagement platform designed to boost player-lifetime value for games: https://www.conductive.ai/ 

zkPass - Seed ($2.5M) | Composable, privacy-preserving identity protocol based on Multi-party Computation (MPC) and Zero-knowledge (ZK) proofs enabling users to prove their verifiable data to third parties: https://zkpass.org/home 

Emtech - Seed ($4M) | Developer of central banking infrastructure and developer of Central Bank Digital Currency (CBDC) Innovation kit: https://emtech.com/ 

Mahjong Meta - Private Sale ($12M) | Skill-based blockchain competitive game based on rules of Riichi Mahjong: https://www.mjmeta.io/ 

Orbital - Seed+ ($6.4M) | Global payments and FX platform supporting solutions for both traditional and crypto payments: https://www.getorbital.com/ 

AltLayer - Seed (Not Disclosed) | Decentralized protocol for developers to launch application-tailored rollups: https://www.altlayer.io/ 

KiloEx - Seed (Not Disclosed) | User-friendly decentralized exchange for perpetual futures: https://www.kiloex.io/ 

Kinza - Seed (Not Disclosed) | Decentralized lending protocol bulti on BNB Chain and features Real Yield that employs a dynamic interest rate curve: https://kinza.finance/ 

Sleepless AI - Seed (Not Disclosed) | AI blockchain-based virtual companion game: https://twitter.com/sleeplessai_lab 

D8X - Seed ($1.5M) | Institutional-grade decentralized exchange (DEX) for perpetual futures powered by Polygon zkEVM: https://d8x.exchange/ 

VIP3 - Seed ($2M) | Web3 benefits and membership platform, providing users with rewards and discounts to leading blockchain apps: https://www.vip3.io/ 

New Funds

No new funds this week.

🙌 Cool Resources

🐕 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.