AWeb3VC - Funding Round Up #9

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🗓️ Week of: February 26 - March 4, 2023

Web3 Funding Snapshot

🚀 The Highlights

Last week, a total of over $148M was raised across 27 announced rounds. It was a relatively uneventful week and the first time funding has dropped below $200M in a week since January. Unsurprisingly, infrastructure was the leading category receiving funding, with DeFi not far behind. Over 63% of all rounds were concentrated at the Seed stage.

It's great to see that we've reached the milestone of $2B+ in aggregate funding coming into Web3 so far in 2023. However, as we all know, this is far from the levels we saw at this point in 2022 and 2021. Nonetheless, there is a constant flow of emerging Web3 startups and projects as "buidlers" keep "buidling."

🏆 Largest Funding Round

➡️ Really Really, a decentralized blockchain-powered telecommunications network, announced $18M in seed funding led by Polychain. The company plans to launch a decentralized mobile network (DeWi) that allows users to convert unused internet bandwidth into 4G/5G signals and get paid in USD or tokens as usage on the network grows. Additionally, they plan to launch their own wireless service that will use the DeWi network, which is set to launch later this year.

Why this matters?👉 They are not the first. Helium was a pioneer of decentralized wireless powered by a Web3 incentive model via the HNT token. However, it seems that Helium has fallen short in their tokenomics. While they have attracted users who are rewarded by contributing bandwidth, hardly anyone actually uses the HNT token to access wifi on the network. Thus, if Really can successfully build and launch a mainstream wireless service, there will be significant demand to use their DeWi network, which in turn could provide a substantial incentive pool to their bandwidth suppliers. I also like their product strategy of initially launching a wireless carrier comparison website to drive initial interest in their product before the wireless network launches.

😎 Noteworthy Company 

➡️ Redeem is building a blockchain-agnostic connectivity layer that allows individuals to participate in Web3 at various endpoints by scanning a QR code or using their phone number. At its core, Redeem connects Web3 wallets to a cellphone number, effectively linking a single person to a wallet through an existing verification system. Essentially, Redeem offers an easier solution for Web3 app developers to onboard new users without needing to educate those users on the process of setting up and using a wallet.

The company recently raised $2.5M in pre-seed funding led by Kenetic Capital and other investors, including Monochrome Capital, VC3 DAO, The Fund, Flyover Capital, CMT Digital, and KCRise Fund. Redeem's founder, Toby Rush, previously founded biometric ID verification firm EyeVerify, which was acquired by Alibaba's Ant Group for $100M in 2016.

Why this matters?👉 UX will be key to mainstream crypto adoption. By using QR codes and cellphone numbers, Redeem simplifies the process of onboarding new users into Web3 and transferring assets. Not to mention, the founder has already built a similar solution that's now being used by one of the most widely used fintech apps in the world (Alipay). If Redeem can nail down their GTM strategy, there is a good chance this could become the next Wallet Connect.

👀Observations, Trends & Themes

➡️ Banking for Crypto Companies in Jeopardy?

Last week, troubling news emerged from Silvergate Capital, the parent company of Silvergate Bank, one of the leading banking partners to crypto and Web3 companies in the US. The company announced that it needed to delay filing its annual financial statements due to pending regulatory investigations and lawmaker inquiries. However, what triggered the alarm bells was the following statement, leading many to believe that Silvergate is "NGMI":

"The Company is evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements. The Company is currently in the process of reevaluating its businesses and strategies in light of the business and regulatory challenges it currently faces." - Silvergate's SEC Form 12b-25 filing

Silvergate's troubles emerged following the collapse of FTX. While the company was adequately capitalized at the time, its close proximity to FTX and Alameda Research triggered a massive bank run with customers withdrawing billions in deposits during Q4-2022. Customers continued to withdraw deposits at the start of 2023. Then last week, many high-profile customers stopped accepting payments on the Silvergate Exchange Network (SEN), which led the bank to suspend the intrabank payment network. Now the bank is on the cusp of failure, potentially facing receivership from the US Federal Deposit Insurance Corporation (FDIC).

Adding insult to injury, this also comes at a time when other banks in the US that work with crypto companies are coming under scrutiny by regulators.

Why this matters?👉 Until last week, Silvergate was the bank of choice for most of the industry. Crypto exchanges, funds, and venture-backed startups all used the bank's payment or deposit services in some capacity. Now the industry is left with only a handful of other suitable banking partners in the US, with many companies flocking to either Signature Bank or Customers Bank.

However, there is no certainty that these banks will accept all new customers. Considering USD is the predominant fiat currency most digital assets are based on, this has the workings of a potential existential crisis if banking services in the US get cut off to crypto startups. Alternatively, companies may look to go offshore or push for greater stablecoin holdings. However, I'm not holding my breath, as both of these options are also facing setbacks... Let's just say, I'm keeping my fingers crossed 🤞

Funding Rounds

Top 15 Rounds

Note: The Block first reported ZenGo's $10M Series A extension round on Feb 28. We're aware that the round is nearing completion, but not formally announced yet. Thus, we've included the round in our reporting this week.

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

All Rounds

Bebo Lab - Seed ($2.3M) | Web3 gaming and social network metaverse: https://bebolab.io/

DigiFT - Seed+ ($10.5M) | Decentralized exchange (DEX) for asset backed security tokens (STO): https://www.digift.sg/

Mangrove - Series A ($7.4M) | Order book-based decentralized exchange (DEX) that allows liquidity providers to post arbitrary smart contracts as offers: https://mangrove.exchange/

Term Labs - Seed ($2.5M) | Lending and borrowing platform that enables fixed-rate term loans to be issued through on-chain auctions: https://termfinance.io/

Portal Labs - Seed ($5.3M) | Web3 wallet infrastructure that allows developers to embed wallets into their applications secured using multi-party computation (MPC): https://www.portalhq.io/

ether.fi - Private Sale ($5.3M) | Decentralized non-custodial delegated staking protocol with a Liquid Staking Derivative token: https://ether.fi/

Hashnote - Seed ($5M) | Regulated institutional-grade DeFi gateway and investment management platform: https://www.hashnote.com/

Avalon Corp - Seed ($13M) | Web3 gaming studio developing an interoperable gaming platform for the metaverse: https://playavalon.com/

Gosleep - Seed ($2M) | Web3 lifestyle app and social driven game that rewards users for healthier sleep behavior and participation: https://gogogosleep.com/index

Finoa - Strategic (Not Disclosed) | Institutional grade digital assets custodian: https://www.finoa.io/

FLUUS - Seed ( $600K) | Aggregator of fiat-to-crypto gateways focused on emerging markets: https://fluus.com/

Really - Seed ($18M) | Decentralized wireless service based on blockchain technology: https://really.com/

Wakweli - Seed ($1.1M) | Protocol that issues certificates of authenticity for NFTs and other tokenized assets: https://wakweli.com/

Omniapp.ai - Private Sale (Not Disclosed) | Decentralized protocol offering a suite of AI and machine learning products: https://omniapp.ai/

ZenGo - Series A+ ($10M) | Digital assets wallet secured using multi-party computation (MPC): https://zengo.com/

Orange Comet - Seed+ ($7.2M) | Web3 entertainment and technology company, developing ecosystems around Web3 experiences and gaming: https://orangecomet.com/

Helika - Seed ($4M) | Web3 product analytics application that combines on-chain and Web2 data to help Web3 brands better understand their communities, increase user acquisition and engagement, and drive overall growth: https://www.helika.io/

Impossible Cloud - Seed ($7.6M) | Decentralized cloud storage solution: https://www.impossiblecloud.com/

Conflux Network - Private Sale ($10M) | Layer 1 blockchain network that uses a consensus protocol known as Tree-Graph, which is a hybrid of Proof-of-Stake (PoS) and Proof-of-Work (PoW) consensus mechanisms: https://confluxnetwork.org/

Zarta - Seed ($5.7M) | Ad free, micro pay per view video platform that enables connect creators to connect directly to their communities: https://zarta.com/

Redeem - Seed ($2.5M) | Blockchain agnostic connectivity layer that allows individuals to participate in Web3 at various endpoints by scanning a QR code or using their phone number: https://redeem.xyz/

Velocity Access - Seed ($5M) | Ticketing, destination management and customer experience platform: https://www.velocityaccess.io/

insrt finance - Seed ($2.2M) | A protocol for accessing returns and yields from non-fungible tokens (NFTs): https://www.insrt.finance/

Few and Far - Seed ($10.5M) | NFT Marketplace built on NEAR Protocol: https://fewfar.com/

VitalXP - Seed ($3M) | Developer of Lowlife Forms, a Web3 first person shooter game set in a science-fantasy: https://www.vitalxp.io/

Metrika - Series A ($4M) | Monitoring and analytics platform that provides visibility and actionable insights into blockchain networks: https://metrika.co/

REPUBLIK - Seed ($3.5M) | Web3 content distribution and video platform that gives power back to creators and fans: https://republik.gg/

New Funds

No new funds announced this week. However, Polychain is reported to be raising $400M for its 4th fund and Coinbase announced the acquisition of asset manager One River Digital as the firm diversifies its institutional product offerings.

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.