Gm.
Please enjoy the May Deal Flow Digest, a monthly newsletter recapping recent 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 Crypto VC
Blockchain Venture Capital funds raised unprecedented quantities of capital from Q1 2022 to Q1 2023. There was strong support and interest from institutional Limited Partners (LPs), with plenty of money flowing into the cryptocurrency space. Now, less so. LPs have very much slowed their capital deployment - or perhaps have shifted it to other places like AI.
Less LP Capital means funds are extending their deployment periods and/or delaying and likely reducing subsequent new fund formation. There is just not a lot of new capital flowing into the space at the moment and the fundraising environment for Crypto VC is likely to stay depressed for the rest of the year if the current macro environment doesn’t change much.
This means funds are being more selective around quality and valuation. Deals are less competitive, funds have longer to diligence deals and valuations have dropped substantially from the mania that was the last 2 years. This potentially means that the second half of 2023 and early 2024 could be a great time to deploy capital if you have it….
For Crypto Startups, this means it’ll likely take longer to fill your round, with multiple founders I know who are “waiting for a lead investor to commit” and having trouble raising in general. With less abundant capital, crypto startups have started to focus on reducing cash burn to extend runway and… you know try to monetize their products and get some semblance of product market fit more quickly.
Some great articles going into more detail Crypto VC in general:
Regan (Lattice Capital): Where Crypto VC Goes From Here.
AI x Crypto
Last month we chatted about AI in fundraising, but since most of the large funding rounds have an AI-spin to them, worth mentioning again this month.
AI is obviously going to be tremendously important, and more important at a staggering pace. This ascent of AI warrants thinking more deeply about the possible relationship with cryptocurrency. How will they work together? Yet to be seen.
Some good resources to think more deeply about how AI x Web3 could work together:
Mohamed Fouda & Qiao Wang (Alliance) - Watch: AI and Web3 on Bankless
Jake Brukh (CoinFund) - Watch: AI x Web3 on Blockcrunch
Kyle Samani (MultiCoin) - Thread / Article: Convergence of Crypto and AI: Four Key Intersections
Accelxr 1k(x) - Thread: Proving Machine Learning model with ZKPs
The intersection of AI x Web3 / Crypto / Blockchain is an exciting new opportunity that is fun to think about, and undoubtedly there is something there.
But what about from a Capital Allocation perspective? Crypto is no longer such a “shiny new technology.” Move over crypto, AI is coming through? It is noteworthy that Paradigm, the largest venture capital fund in the crypto space, recently modified their website to include AI alongside crypto. If such a prominent player in the crypto industry is making this move, it begs the question of who else is following suit.
Top Five Crypto Funding Rounds
WorldCoin | $115.0M | Series C | 5/24/23
Worldcoin has raised $115 million in a Series C funding round led by Blockchain Capital with participation from a16z, Bain Capital Crypto, and Distributed Global. OpenAI CEO Sam Altman co-founded the crypto-focused project with a three-part mission: create a global ID, a global currency and an app that enables payment, purchases and transfers using its token — alongside other cryptocurrencies and traditional assets. Worldcoin has faced some concerns from people worried about privacy risks because it requires scanning a billion people’s eyeballs with a five-pound chromatic sphere called “The Orb” in exchange for its token.
Auradine | $81.0M | Series A | 5/15/23
Auradine has raised $81 million in a Series A funding round led by venture capital firms Celesta Capital and Mayfield. Auradine, a tech startup co-founded by a serial entrepreneur with a track record of building billion-dollar companies, raised a sizable $81 million in its initial funding round for the development of "next-generation web infrastructure." Other investors in the round included Cota Capital, DCVC, Marathon Digital Holdings (MARA), and Stanford University. As part of the investment, Celesta's Sriram Viswanathan and Mayfield's Navin Chaddha will join the Auradine board.
Magic | $52.0M | Stategic | 5/30/23
Magic, the leading wallet-as-a-service (WaaS) provider, announced it has raised $52 million in a strategic funding round led by PayPal Ventures, with participation from Cherubic, Synchrony, KX, Northzone, and Volt Capital. Magic is enabling web3 mass adoption by serving as the de facto WaaS provider for companies that are searching for safe and easy ways to bring their customers over to web3. Magic provides a seamless enterprise-grade, low-effort solution to web3 migration that is opening up lucrative new avenues from customer loyalty programs and digital collectibles to employee recognition, ticketing, memberships, and more. Magic's customers are some of the most trusted brands across retail, music, fashion, and gaming including Mattel, Macy's, Xsolla, Immutable, and more.
Applied Digital | $50.0M | Debt Financing | 5/18/23
Applied Digital Corporation (Nasdaq: APLD) ("Applied Digital" or the "Company"), a designer, builder, and operator of next-generation digital infrastructure that is designed for High-Performance Computing ("HPC") applications, today announced that the Company has reached an agreement for a loan with a maximum principal amount of $50.0 million. The Company intends to use the loan, which has a 2-year term and 9.0% interest rate, to provide additional liquidity to fund the buildout of its AI Cloud platform and datacenters.
GrowMiner | $48M | Debt Financing | 5/25/23
GrowMiner announced a $48 million strategic investment. GrowMiner is a cutting-edge platform that allows you to easily stake your cryptocurrencies and earn passive income. The platform mainly provides trading tools for institutional and individual investors. GrowMiner plans to channel these funds to further its mission, spurring team expansion, product refinement, and accelerating its market penetration, all in the pursuit of establishing a world-class blockchain trading platform.
Click to see all of May’s funding rounds here:
Hackathons
Upcoming
ETHGlobal FS (Virtual) June 2-21
$150K Available in prizes. Virtual too!
ETHGlobal Waterloo June 23-25
$175K Available in prizes. Vitalik listed as a speaker/judge/mentor…
Fantom Hackathon Q2 2023 July 3
$300K Available in prizes to build quick and secure apps on Fantom Mainnet.
Recently Completed
ETHGlobal Lisbon May 12-23
Delphi Labs Cosmos Hackathon May 1-8
Demo Days
Upcoming Demo Days
A little light on the upcoming demo days this month. If we’ve missed any we should know about, please let us know!
500 LATAM Demo Day (Virtual) June 8
Recently Completed Demo Days
AllianceDAO Demo Day May 17
a16z Crypto Startup School Demo Day May 24
That’s a wrap for May.
In case you missed it, we’ve officially announced Bankless Ventures a $30M early-stage web3 Venture Fund. We’ll continue publishing this newsletter every month!
Enjoyed this newsletter or the data? Please share it with a friend, and THANK YOU for your time.
Good luck out there!
Ben & Brady