Deal Flow Digest November 2022

Dec 05, 2022

Gm.

Please enjoy the November Deal Flow Digest, a monthly newsletter recapping recent web3 funding rounds.

It may be a bear market, but it’s not a crypto winter. There’s still significant funds investing into web3, and we’re tracking it.

The State of Venture Capital

Last month, we talked about how Web3 funding dropped by 58% and the number of investments fell 30% quarter-over-quarter (QoQ).

We’re interested in seeing how much of this drop is Web3 specifically — given the amount of devastating industry news from Luna this spring, to Celsius, to Three Arrows, to the recent FTX and Blockfi bankruptcies — there seems to be endless reasons why funding has plummeted.

However, a significant chunk of this drop in funding seems to be correlated with macro changes in VC funding patterns overall.

Overall Venture Funding in 3Q22 dropped 34% QoQ — the largest change in over a decade — while the number of investments dropped by 10%. Investors are slowing down across all industries, especially in later rounds where the value of raises over $100M decreased 44% QoQ.

It’s been a brutal year for Web3, but keep in mind startup funding has declined across the board. Also keep in mind that despite the major trends there are always big players doubling down - e.g. Animoca announcing their $2B Metaverse Fund.

As investors get more selective, we get to see the strongest companies emerge out of the wreckage. The startups below that have grown fast enough to deserve higher valuations despite the bear market are worth following.

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Top Five Crypto Funding Rounds

Matter Labs | $200 Million | Series C | 11/15/22

Matter Labs raised $200 Million in series C round led by Blockchain Capital and Dragonfly Capital, with participation from Lightspeed, Variant, and a16z. Overall, Matter Labs has raised $458 million, including a $200 million ecosystem fund to foster zkSync adoption.

Fenix Games | $150 Million | 11/23/22

Fenix Games has raised $150 million to create a new kind of publisher for blockchain gaming. The idea is to create a publisher and platform company that plays a key role in bringing blockchain games to market. Fenix Games plans to acquire, invest and publish both existing games and blockchain games of the future.

Keyrock | $72 Milion | Series B | 11/29/22

Keyrock has raised $72 million Series B funding round led by Ripple, who is also been a key client for the firm for the last three years. Venture firms Six Fintech Ventures and Middlegame Ventures also participated in the round, which closed mid-September. Keyrock CEO Kevin de Patoul declined to share the valuation but said in an interview with The Block it was a significant lift in valuation — the firm last raised €4.3 million in Series A funding in October 2020.

TRM Labs | $70 Million | Series B | 11/08/22

Blockchain intelligence firm TRM Labs has raised $70 million in a Series B extension round led by Thoma Bravo, a private equity firm with $122 billion in assets under management. TRM Labs will use the capital, which brought total funding up to $130 million, toward product development and hiring. Other participants in the round included new investor Goldman Sachs and returning backers PayPal Ventures, Amex Ventures and Citi Ventures among others.

Ramp | $70 Million | Series B |11/08/22

Crypto-focused fintech company Ramp has raised $70 million in venture capital, upping its pledge to continue building a unified payment experience for digital assets. The Series B investment round was co-led by venture firms Mubadala Capital and Korelya Capital, with participation from Balderton Capital and Cogito Capital.

Click to see all of November’s funding rounds here: