Deal Flow Digest August 2023

Sep 01, 2023

Gm.

Please enjoy the August 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).

The State of Private Markets

2023 has not been pretty for private markets, not just crypto. Funding is down, valuations are down, investors are positioning toward more risk off - and enjoying their 5% (nominal) yields on cash while doing so.

At the end of July, 2Q23 reports are released and… the data backs up this feeling.

Discussed in length on the recent Episode 141 of the All in Podcast (with Bill Gurley & Brad Gerstner) if audio is your preferred consumption method.

Some Takeaways:

Slight uptick v. 1Q23 in total capital raised (Driven by increase in $50M+ rounds in the quarter)

But still massively down YoY

Valuations down, but not down as much as I had thought (versus 2022):

Current Median Valuations:

Very interesting that Down rounds were 20% of all fundraising rounds:

Much of the data here indicates signs of harder fundraising times. Like it or not, private markets have been highly correlated to the public tech market (NASDAQ or $QQQ). Highly correlated means: 0.98 for QQQ/Investing & 0.93 for QQQ/Exits.

Shout out Tomasz Tunguz for the chart.

We’re optimistic here, so to inject a sliver of hopium, from Angellist: “While we predict a full-fledged “recovery” likely won’t take place until early 2024, we anticipate venture activity may improve in the third and fourth quarters, albeit still at a level below historical pre-pandemic norms.” That’s something!

I’ve also added a section in this monthly newsletter recapping Crypto / Web VC Fund Fundraise Announcements. If you’ve recently announced, please send over your announcement and I’ll make sure I include it in the month’s recap!

Top Five Crypto Funding Rounds

BitGo | $100M | Series C | 8/16/2023

BitGo, a Palo Alto, CA-based provider of wallet solutions for the digital asset economy, raised $100M in Series C funding, at $1.75 Billion valuation. The funds will be deployed to make strategic acquisitions and expand its secure and regulated custody, wallet, and infrastructure solutions globally. Since January 2023, BitGo has seen a 60% increase in newly onboarded clients, 20% increase in AUC, 200% increase in fiat custody, and 40x growth in staked assets. BitGo is also the custody provider for the FTX creditors funds under John Ray III's leadership and had been previously chosen as the distributor for Mt. Gox creditors.

ZetaChain | $27M | Equity Financing | 8/16/2023

Layer-1 network ZetaChain has secured $27 million to support its chain-agnostic platform, according to an announcement on Aug. 16. Participants in the round include Blockchain.com, Human Capital, Vy Capital, Sky9 Capital, Jane Street Capital, VistaLabs, CMT Digital, Foundation Capital, Lingfeng Capital, GSR, Kudasai, Krust and other investors.The protocol created in 2021 is designed to provide standardized interoperability between networks, allowing non-smart contract chains to interact with the broader decentralized finance (DeFi) ecosystem. As a result, developers can implement smart contracts on networks not running the technology, such as Bitcoin and Dogecoin.

Jada AI | $25M | 8/18/2023

Jada AI, a blockchain-powered AI project, has secured $25 million from LDA Capital, an alternative investment group. The project aims to provide AI solutions that enhance decision-making and scaling for organizations. The capital will be used to grow the project’s team of developers and add new organizations. Jada operates in a blockchain-based environment where AI computations are executed among the nodes participating in the network.

Socket | $20M | Series A | 8/1/2023

Socket, a startup that provides a scanning tool to detect security vulnerabilities in open source code, today announced that it raised $20 million in a Series A round led by Andreessen Horowitz (a16z). The tranche had participation from Abstract Ventures, Wndrco, Unusual Ventures and an impressively high-profile list of angel investors, including the co-founders of Box (Aaron Levie), Figma (Dylan Field), Okta (Frederic Kerrest), Vercel (Guillermo Rauch) and Eventbrite (Julia and Kevin Hartz).

Allseated | $20M | Debt Financing | 8/29/2023

Allseated, a platform that helps event organizers plan and showcase venues virtually, has raised $20 million in a debt round of funding*. Founded in 2011, Allseated serves a collaborative space-visualization platform that allows venues and planners to create virtual walkthroughs for prospective clients, including tools for building 360-degree views of buildings and designing floor plans. The San Francisco-based company raised $15 million in funding last year as it looked to “expand beyond event visualizations into corporate metaverses.”

Click to see all of August funding rounds here:

Link: https://airtable.com/appwEP3o1oa4UHmZg/shr0otjc5ftzTJGBA/tblboPbH69lWrClhE

August Crypto VC Fund fundraise Announcements

Yes, new crypto VC funds continue to announce their successful fundraises. We’ll flag them here when they’re announced.

29-Aug-23: MoonPay announces MoonPay Ventures. MoonPay Ventures will mainly invest between $100,000 to $1 million, targeting seed and Series A rounds. It has already invested in more than 25 companies, including BCB Group, Ledger, BRUT, BeatClub, absolute labs, Create/OS, BridgeTower Capital and Mythical Games, according to Abhay Mavalankar, VP of corporate development and investments at MoonPay. There isn’t a specific fund amount that MoonPay is allocating, and the team will invest off its balance sheet with a “definite angle” toward commercial ROI, he added.
28-Aug-23: Vessel Capital, a pioneering venture capital firm, has unveiled a formidable $55 million fund dedicated to fueling the growth of Web3 infrastructure and applications, as reported by TechCrunch. Instead of focusing on rapid expansion, the firm’s vision is to support early-stage crypto founders, enabling them to navigate the challenges of launching and nurturing their projects.
14-Aug-23: CVP NoLimit Fund I has reportedly bagged a fund worth $50 million from its investors. This is the fund round, with more to follow in the days to come. CVP NoLimit Fund is a joint venture between ClearVue Partners and NoLimit Holdings. Funds raised from the first round will be directed to early-stage crypto start-ups.This will help them to scale their operations, expand their teams, and continue functioning in the crypto domain. It was led by Gin Chao, the Former Chief of Strategy at Binance.
13-Aug-23: UAE-based crypto VC fund Illuminati Capital, has raised $50 million for a fund that aims to invest in early-stage blockchain and Web3 gaming startups. Founded by Vickaash Agrawal, Dhaval Parikh, Muhannad Abulhasan and Laura K. Inamedinova, Illuminati Capital aims to build a Web3 ecosystem, driving transformative shifts in decentralised technologies. Illuminati Capital will focus on multiple verticals, including decentralised finance (DeFi), blockchain gaming, artificial intelligence, NFT infrastructure, and real-world assets (RWA).
8-Aug-23:L1 Digital AG (L1D), a Zurich-based investment advisor focused on digital assets that has $400 million in assets under management, has raised $152 million for its second venture capital fund, the firm exclusively told CoinDesk. L1D will invest 70% of the funds directly into crypto startups and the other 30% into early-stage crypto-focused investment firms. L1D currently backs notable industry investors Multicoin Capital, DeFiance Capital, Castle Island Ventures and 1kx.