Gm!
Please enjoy the April Deal Flow Digest, a monthly newsletter recapping recent Crypto / web3 funding rounds.
Be sure to check out the Airtable below with ALL the deals, and the recent hackathon/demo day results (in the links).
2024 is off to a hot start with Crypto Startup Fundraises.
Ah, the reflexivity of markets - markets go up, we’re optimistic and deploy more quickly. Never fails.
When looking at fundraising rounds, it’s imperative to zoom out and look at the sheer madness of capital deployment in 2021 & 2022.
Now that “the bull market is back” - many of the projects from 2021 / 2022 (and even 2023 /24), see the markets moving, and… Everyone decided it’s time to launch tokens and “decentralize.”
Tokens are launching left and right right now. Seems everyone got the greenlight at the same time.
Launching tokens (or the TGE - “Token Generation Event”) has evolved over the years. Since the early ICO days we’ve now arrived at the current “meta” which is low float / high valuations. This typically comes with a large (5-15%) airdrop to your “community” and a big cliff until the majority of the tokens hit the market.
Token prices come out of the gate hot - traded on centralized exchanges and propped up by market makers, these token prices are high, and floats are low. Hooray, insanely high valuations.
When talking “valuations” in the crypto world, typically we refer to the Fully Diluted Valuation (FDV). Current FDVs of launched projects are… very high.
High FDVs is a byproduct of VERY low circulating supply (“low float”) which is structural because most of the tokens are still locked. These locked large % of the tokens are reserved for Team / Investors, and they typically start vesting 12 months after the Token Generation Event (“TGE”).
So now, we have all these newly launched tokens, with incredibly low float driven by only a small % of the total tokens in circulation…. The issue is that more tokens will unlock with time.
And, lots of supply is going to hit the market. Here are some recent token launches with their Market Cap (Price x Circulating Tokens) and FDV (Price x Total Tokens):
What does this mean? It means that significant token unlocks will be in the future for these projects (and many more).
So as more tokens unlock, there needs to be buying pressure to maintain the FDV - otherwise, it’s really ugly / down-only price action that will follow. A goodie from Cobie that is super relevant is “Market cap is a measure of demand, while FDV is a measure of supply.”
To maintain these FDVs, there needs to be demand for all of these new tokens that will hit the market. Full stop.
Who is winning with such high FDV new token launches? I suppose it’s: Airdrop recipients (“Airdrop Farmer Meta”), Earlier Investors (markups / paper gains), and Other Projects raising (comparable valuations).
Private market comps - this is really a slippery slope. High Valuations for projects that have launched tokens are being used as Comps for Private Market deals. New Infra project? $100M pre-product seems reasonable if all the comps are saying it “should be” valued at $3-5B, right? Well, right if that $3-5B is a reasonable valuation.
As long we’re in an up only paradigm with BTC/ETH goes up, it probably won’t matter much. But, it’s in bearish market conditions that we could see some really ugly action for play out. "Only when the tide goes out do you discover who has been swimming naked" - Warren Buffett.
Too many new coins, too many projects, and too many unlocked coins that will hit the market going forward. And the pace of token launches likely won’t slow down. Retail is tracking these things, and they won’t always be buying your outrageously high FDV, marked-up bags. New token launches? Time to iterate again…. Bring back ICOs?
Private Market deals? Don’t get carried away with your exit comps. Stay safe out there and deploy responsibly.
Top Eight Crypto Funding Rounds
Monad Labs | $225M | 2024-04-09
Monad Labs, the developer behind the Ethereum-compatible Layer 1 blockchain Monad, has finalized a $225 million funding round led by investment firm Paradigm. Electric Capital, Bankless Ventures, Coinbase Ventures, Castle Island Ventures, GSR Ventures and Greenoaks also participated in the round, among others.
Berachain | $100M | Series B | 2024-04-12
Berachain, a modular Layer 1 blockchain undergirded by a "proof of liquidity" consensus mechanism, which is a way to verify the liquidity available for certain assets on-chain has raised $100 million in its recent funding round. The round was co-led by Brevan Howard Digital and Framework Ventures. It also included Hack VC, Polychain Capital, and Tribe Capital as venture capital funds flowed into the market amid the bullish sentiment.
Auradine | $80M | Series B | 2024-04-10
Auradine has raised $80 million in a Series B funding round. Several investors, including StepStone Group, Top Tier Capital Partners, MVP Ventures, Maverick Capital, Celesta Capital, Mayfield Fund and Marathon Digital, joined the "oversubscribed" round. Founded in 2022, California-based Auradine launched its Teraflux bitcoin miners last November. The company has so far shipped its machines to over 30 "leading data-center-scale" miners. Auradine designed its bitcoin miners in the U.S., which it said is a critical factor for decentralized supply and national security in the current geopolitical landscape.
IoTeX | $50M | 2024-04-03
IoTeX has raised $50 million investment from Borderless Capital, Amber Group, Foresight Ventures, FutureMoney Group, SNZ, Metrics Ventures, EV3 and Waterdrip Capital. The new funding will drive DePIN growth and adoption through an investment in long-term staked $IOTX, the DePIN token that governs and fuels the IoTeX DePIN ecosystem, as well as investment in the DePIN projects building on IoTeX with the IoTeX Foundation and the DePINsurf accelerator fund.
Movement Labs | $38M | Series A | 2024-04-25
Movement Labs, a blockchain company that aims to bring Facebook's Move Virtual Machine to Ethereum, has secured $38 million in a Series A financing round led by Polychain Capital. Movement's funding round saw participation from venture capital firms including Hack VC, Placeholder, Archetype, Maven 11, Robot Ventures, Figment Capital, Nomad Capital, Bankless Ventures, OKX Ventures, dao5, and Aptos Labs – the company behind Aptos.
Burnt (XION) | $25M | Series A | 2024-04-01
XION is built to abstract away all crypto complexities. It empowers developers to create frictionless Web3 experiences, with a Generalized Abstraction layer that removes technical barriers for all users. XION has raised $25M from investors including Animoca Brands, Laser Digital (Nomura), Multicoin, Arrington Capital, Draper Dragon, Sfermion, GoldenTree, and more.
Mezo | $21M | Series A | 2024-04-09
Blockchain venture studio Thesis has unveiled Mezo, a Bitcoin layer-2 network, from stealth with a $21 million fundraising round led by Pantera Capital. The fundraising also involved Multicoin, Hack VC, ParaFi Capital, Nascent, Draper Associates, Primitive Ventures, Asymmetric Ventures - Dan Held, and DCF GOD, Thesis said Tuesday.
Ellipsis Labs | $20M | Series A | 2024-04-04
Ellipsis Labs, the developer of the DeFi protocol Phoenix on Solana, has successfully completed a Series A funding round, raising $20 million. The funding round was led by Paradigm, with participation from Electric Capital. At the heart of Ellipsis Labs’ mission is the creation of a new financial ecosystem, designed to marry the accessibility and transparency inherent in decentralised infrastructure with the efficiency traditionally only found in conventional markets. This bold vision is exemplified by their flagship product, Phoenix, which stands as a beacon of innovation among on-chain exchanges.
Aligned Layer | $20M | Series A | 2024-04-25
EigenLayer-Powered Aligned Layer Raises $20M to Make ZK Proofs Faster, Cheaper on Ethereum led by Hack, with support from dao5, Bankless Ventures, L2 Iterative Ventures (L2IV), Nomad Capital, Finality Capital Partners, Symbolic Capital, Theta Blockchain Ventures, J17 Crypto, Everest Ventures Group (EVG), Decima, GM Ventures, Protagonist, and other strategic partners and angels.
Click to see all of April’s funding rounds here:
April Crypto VC Fund fundraise Announcements
30-Apr-24 Sweep Ventures Launches With $15 Million Fund to Propel Sustainable Innovation in Web3 and Blockchain. Sweep Ventures is dedicated to nurturing early-stage developments in web3 and blockchain technology. As a newly founded firm, Sweep Ventures is committed to fostering sustainable innovation from its inception, leveraging the expertise of its multidisciplinary team to drive positive change within the decentralized landscape.
2-Apr-24 Crypto Venture Capital Firm Paradigm Looking to Raise Up to $850M for New Fund. Bloomberg said if the deal is completed at the lower end of the range, it would still mark the industry's biggest since the recent crypto winter slump. Paradigm, founded by Coinbase co-founder Fred Ehrsam and former Sequoia partner Matt Huan, previously raised $2.5 billion for a fund during the height of the bull run in Nov. 2021.
Hackathons
Ongoing
Bonkathon April 29 - June 10
$350k Available in prizes.
Upcoming
ETH Global Sydney May 3 - 5
$125k Available in prizes.
ETH Global Brussels July 12-14
$425k Available in prizes.
Recently Completed (results in link)
Scaling Ethereum 2024 April 5 - 26
That’s a wrap for April.
Did you enjoy this newsletter or the data? Please share it with a friend, and THANK YOU for your time.
Thank you and good luck out there!
Ben Lakoff, CFA
Twitter: https://twitter.com/benlakoff