AWeb3VC - Funding Round Up #36

🗓️ Week of: Sept 3-9, 2023

Also be sure to follow me on Twitter @aweb3vc 🚀

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

$584M+ was raised across 33 funding rounds in Web3. After weeks of a summer slump in funding, Web3 venture is showing signs of life again. Of this week's funding, $417M came from Marathon Digital restructuring its debt into equity in a cashless transaction, with Coinbase undertaking a similar move (though not for equity). Financial engineering deals aside, true venture-style deals surpassed $150M for the week, with over 30 companies receiving funding, primarily at the Seed stage. While this doesn't necessarily indicate an improving funding environment, seasonality seems to have influenced many deals, postponing them until the beginning of September. We hope to see more deals this Fall, especially given the emphasis on crypto's corporate narrative this week, underscored by the FASB's decision on fair value accounting and Visa's expansion of stablecoin settlement, topics further discussed in this edition.

🏆 Largest Funding Round

Note - Deal highlighted as the largest venture style raise this week

➡️ Story Protocol announced $54M in Seed funding led by a16z Crypto. The round was broken up into two tranches with $29.3M raised in May 2023 and the remaining $24.7M closed in September 2023. In addition to a16z, other participants in the round included Hashed, Endeavor, Samsung Next, Paris Hilton’s 11:11 Media, Dao5, Two Small Fish Ventures, Alliance DAO, Foresight Ventures, and Mirana Ventures along with several other investors including prominent figures in media and entertainment.

Story Protocol seeks to democratize intellectual property (IP) creation through a permissionless extendable protocol and a dynamic global IP repository. It offers an infrastructure that permits creators to manage the entire lifecycle of IP development and licensing on-chain. Furthermore, it allows IP to be composable and remixed via "story legos". The protocol also incorporates features like provenance tracking, frictionless licensing, and revenue sharing.

The project aims to empower artists and creators to monitor how their IP is utilized and adapted by other creators across various mediums involved across prose, images, gaming, audio, and more. Story Protocol also seeks to appeal to third-party developers looking to harness the protocol to develop tools for crowdfunding, capital formation, IP discovery, licensing modules, and authentication for AI content, among other functionalities.

Why this matters?👉The hype behind this deal and company is warranted. The global copyright licensing market is a multibillion-dollar industry that continues to grow with the advent of the internet, digital platforms, and streaming services. However, tools to track unauthorized use and monetize digital rights remain highly fragmented. Blockchain-based solutions, such as Story Protocol, could offer potential remedies by automating IP licensing agreements, monitoring their use, and ensuring automated compensation to the original creator. This becomes especially relevant with the rise of generative AI, where transparent IP provenance tracking and fair attribution need to be extendable at scale… Not to mention with the backing of Endeavor, one of the largest talent and media agencies in the world, Story Protocol could have access to some of the most prominent IP holders in the world.

😎 Noteworthy Company

➡️ Brine Finance is a non-custodial, decentralized orderbook exchange powered by the Ethereum layer-2 scaling solution, StarkWare, which utilizes zero-knowledge (zk) proof technology. The platform supports spot trading and offers immediate order execution, making it ideal for high-speed trading. Leveraging StarkWare’s zk algorithms, trades are executed in a private and secure manner, without revealing sensitive trade information, thus addressing concerns such as front running. Constructed atop a layer-2 scaling solution like StarkWare, Brine provides gas-free trading with low fees (0.1%). Additionally, the platform's cross-chain capabilities allow traders to oversee their funds from a singular dashboard, simplifying portfolio management.

The platform launched for traders in May and has recently achieved a daily trading volume of $3-4M. It also announced a $16.5M Series A funding round at a $100M valuation, led by Pantera Capital. Other participants included Elevation Capital, StarkWare, Spartan Group, Goodwater Capital, Upsparks Ventures, and Protofund Ventures.

Why this matters?👉Zero-knowledge proof technology is providing some of its most impactful use-cases for decentralized exchanges. Furthermore, DEXs that leverage zk tech, such as Brine, offer a more favorable experience for traders by both protecting trades from MEV and front running and providing gas-free, faster transactions. Brine has been the first to successfully implement an effective zk-DEX and continues to attract trading volumes, further validating the promising use-case for zk tech.

👀 Observations, Trends & Themes

➡️ FASB Votes in Favor of Fair Value Accounting for Crypto

The U.S. Financial Accounting Standards Board (FASB), the standard-setting body responsible for U.S. Generally Accepted Accounting Principles (GAAP), unanimously voted in favor of fair value accounting for cryptocurrencies held on U.S. companies' balance sheets. This change will take effect in the 2025 calendar year, allowing companies to recognize gains and losses immediately on their income statements. This treats crypto assets similarly to financial assets, providing a more accurate reflection of a company's financial condition.

Before this decision, aside from trading firms and hedge funds, companies that held crypto had to classify their holdings as indefinite-lived intangible assets, akin to intellectual property such as copyrights. This classification required crypto assets to be held at the lower of cost or market. Thus, if the asset's value fell below its purchase price, a write-down was necessary. However, if the value increased, the company could only recognize the gain upon selling the asset, not while holding it.

Why this matters?👉This headline might be easily overlooked, but it represents a HUGE development. This accounting rule has been a significant barrier preventing companies from holding crypto. Now, by recognizing holdings at fair value, companies can appreciate the upside of a long-term crypto investment rather than just the losses when the price drops below the purchase value. If this sparks a trend of corporate treasuries allocating to the asset class, crypto custodians and services tailored for institutions holding crypto are poised to benefit the most.

➡️ Visa Expands Stablecoin Settlement Capabilities

Visa announced the expansion of its stablecoin settlement capabilities with Circle’s USDC stablecoin to the Solana (SOL) blockchain. Additionally, it has initiated pilot programs with merchant acquirers Worldpay and Nuvei, two of the world's largest debit and credit card processors. Through this program, clients can now opt for USDC stablecoin settlement instead of receiving fiat currencies, enhancing the speed of cross-border debit and credit card for merchants globally.

Why this matters?👉 To break this down, check out this post from Simon Taylor. TD;LR, HUGE validation for the core value proposition of stablecoins and potentially tailwinds for the USDC and Solana ecosystems.

➡️ Ripple M&A Moves (Again)

Ripple continues its M&A spree with the announced acquisition of Fortress Trust, a U.S.-based crypto-focused chartered trust. Although the exact financial details are undisclosed, the acquisition price is reportedly less than the $250M Ripple paid for Metaco earlier this year. This move signals a rapidly developing trend for Ripple to expand further into crypto financial services. Moreover, Ripple is growing into a notable presence on the buy-side, providing much-needed exit liquidity for emerging crypto startups.

💸 Funding Rounds

Top 15 Rounds

Note1: Marathon negotiated a exchange agreement between debt holders for equity and thus did not receive any cash proceeds from the issuance of new shares.

Note2: Medallion’s raise was disclosed via Reg D filings on Sept 1 for which news of the deal was circulated this week although specific details on the deal have not be disclosed yet.

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

All Rounds

PrimeVault - Seed (Not Disclosed) | Enterprise focused digital asset management custody and trading: https://www.primevault.com/

Kotani - Seed ($2M) | Payment platform that provides a fiat to stablecoin on-ramp and off-ramp to local payment channels in Africa: https://kotanipay.com/

Antmons - Private Sale ($1.8M) | Meta NFT, and play-to-earn GameFi platform: https://antmons.com/

ReadON - Seed (Not Disclosed) | Web3 content distribution and aggregator platform leveraging topic-bound NFT design: https://readon.me/

GenTwo - Series A ($15M) | White-label securitization platform to create investment products for all assets including traditional financial products and digital assets: https://www.gentwo.com/

D3 Global - Seed ($5M) | Interoperable Web3 top level domain names (TLDs): https://d3.inc/

Gleen - Seed ($4.9M) | AI enabled customer support and help desk software: https://gleen.ai/

Freename - Seed ($2.5M) | Web3 top level domain (TLDs) and second level domain (SLDs) names registration and trademark platform: https://www.freename.io/

Story Protocol - Seed+ ($24.7M) | Platform to create, govern, and license IP on-chain, ultimately forming an ecosystem of “story legos” that can be remixed and composed: https://www.storyprotocol.xyz/

TRLab - Seed ($5M) | Platform for discovering and collecting NFT art from the world's leading artists: https://trlab.com/

Trident Digital - Seed ($8M) | Institutional digital asset lending platform that solves for capital efficiency, access, and security: https://www.tridig.io/

Socket - Strategic ($5M) | Interoperability protocol for secure, efficient data, and asset transfers across chains: https://www.socket.tech/

Crucible Technologies - Seed (Not Disclosed) | Software development kit (SDK) that helps make avatars, wallets and inventory more interoperable across the metaverse: https://www.crucible.network/

Bullet Chain - Private Sale ($2M) | Free-to-play, play-and-earn, third person shooter game: https://bulletchain.sg/

PeraWallet - Seed (Not Disclosed) | Open-source, self-custodial wallet that allows users to store, buy and swap on the Algorand blockchain: https://perawallet.app/

Bitcomet (aka. YCrypto) - Seed ($5M) | Privacy focused Layer 2 network utilizing Optimistic Rollup and zk-SNARKs technology: https://ydjycrpot.github.io/YDJ/#/

Nifmint - Seed+ ($100K) | Web3 commerce infrastructure for brands and enterprises: https://www.niftmint.com/

Medallion - Seed ($21.5M) | Web3 platform to allow musical artists to connect with fans: https://www.medallion.fm/

Brine Finance - Series A ($16.5M) | Decentralized cross-chain exchange and orderbook powered by StarkWare: https://www.brine.fi/

Nestcoin (aka. Onboard) - Strategic ($1.9M) | Developer of crypto-native products for everyday people in frontier markets and creator of non-custodial wallet, Onboard: https://www.onboard.xyz/

OpenCover - Seed ($4M) | Distributor of decentralized insurance-like cover products aimed at cryptocurrency and Web3 platforms: https://opencover.com/

GAM3S.GG - Seed ($2M) | Web3 game discovery and content aggregation platform formerly known as Polkastarter Gaming: https://gam3s.gg/

Zeebu - Private Sale ($25M) | On-chain invoice and settlement platform for telecom carriers: https://www.zeebu.com/

LeverFi - Strategic ($5M) | On-chain leveraged trading protocol: https://www.leverfi.io/

Aventis - Seed (Not Disclosed) | Oracle-based synthetic derivatives protocol and trading platform for crypto and real world assets: https://www.avantisfi.com/

Paragraph - Seed (Not Disclosed) | On-chain creator monetization and written content publishing platform: https://paragraph.xyz/

Security Matters - Private Placement ($2.5M) | Molecular marker technology that leverages blockchain to authenticate and track/trace raw materials for supply chain integrity and transparency: https://smx.tech/home

Podium (aka. SorareData) - Seed ($2.1M) | Data and analytics platform for NFT fantasy sports: https://www.podium.top/

BSX - Seed (Not Disclosed) | Institutional grade decentralized derivatives exchange: https://www.bsx.exchange/

Truflation - Seed (Not Disclosed) | Economic data aggregator serving independent, unbiased, real-time data on-chain and off-chain: https://truflation.com/

Helix - Seed ($2M) | On-chain lending protocol and marketplace for off-chain private credit in emerging markets for real world assets: https://helix.helilabs.io/

Pop Social - Seed ($4M) | AI enabled social gateway to Web3: https://www.popsocial.io/

Marathon Digital Holdings - Private Placement ($417M) | Bitcoin miner and one of the largest and most sustainably powered Bitcoin mining operations in North America: https://www.mara.com/

New Funds

Alpha Protocol Ventures - Fund I ($20M)

🙌 Cool Resources

Deep dive into the consumer crypto app stack a thread by Winnie Lau of Blocktower Capital.

🐕 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.